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Capital property boom increases risks
Land fever in Ha Noi has become boisterous in the last two months with projects spanning across the new urban areas in the capital's western region and beyond to many neighbouring areas.
Real estate analysts have warned of potential risks in real estate investment at this time because markets are showing unusual signs.
Analysts have attributed the current land fever to the expansion of the Lang-Hoa Lac highway and to an exhibition focused on development in the capital city towards 2030 and its vision to 2050 which was held last month. The exhibition revealed that five satellite cities and the Thang Long axis would link the Ba Vi region to the west of Ha Noi. The revelation caused development in the Lang-Hoa Lac area to increase rapidly.
In addition, real estate companies have continued to release inaccurate information in order to raise prices, which has created a market of virtual land prices. As a result, people who do not clearly understand real estate investment have rushed to buy land, causing prices to skyrocket even further.
Projects located near convenient transportation infrastructure have seen prices increase from 35 to 55 per cent and trading volume has increased 25 and 30 per cent over last month.
At the end of March, the land in this area ranged from VND26-VND28 million (US$1,368-$1,473) per square metre. The current price is about VND35 million per square metre.
In some project areas, such as Geleximco C and D along Le Trong Tan road which has opened to traffic, land prices have risen from VND42 million to 65-70 million per square metre.
Land near Trung Van nearly doubled in price from two months ago from VND45 million per square metre to VND80 million.
A number of other desirable locations along the Lang-Hoa Lac Highway are up to nearly VND100 million per square metre.
Apartment prices have also increased with residential land nearly doubling, and even tripling in some cases, in the last two months. prices of paddy fields have also increased 2-3 times against last month.
In Tay Ho District, land in the Xuan La urban area was VND130 million per square metre last month, which has increased to VND150 million per square metre now.
Land in Gia Lam District is a comparative bargain, but prices have risen equally rapidly, from VND15-VND18 million to VND25-VND27 million depending on location
Nguyen Thanh Hung, Director of real estate transactions office in Ha Noi, said land prices have nearly doubled from seven or eight months ago. The market has caused the price increase, but it was in excess of its real value because of land speculation, he said.
Herd mentality
Hung said the increase in land prices would be risky for investors and that they should be aware of the risks and latch on to good market opportunities.
If investors have a lack of understanding and follow the herd mentality, they would likely end up buying overly expensive land or land that still needs to be cleared, he said.
According to land experts, the planning and actual implementation of projects are part of a long-term development process. Projects are especially risky when authorised agencies have yet to give planning approval.
Transactions for many projects were still being made directly between traders, and only a small portion of the purchases were used to serve actual housing demand. The market was really showing signs of a bubble and would likely reduce the land fever in the short term, they said.
To control overheated land prices, the Ministry of Construction conducted a three-day land inspection in Ha Noi's overheated land areas, especially in the area formerly known as Ha Tay Province.
The ministry report shows that infrastructure in these areas is better developed, and plans for a series of new roads to be constructed in celebration of 1,000 years of Thang Long – Ha Noi had contributed to the skyrocketing land prices.
The ministry has asked land administration agencies and tax departments to take responsibility for any illegal land transaction cases.
It has also proposed the Government to conduct studies on allocated land, including forest land and paddy growing fields, neither of which may be traded through illegal transactions.
The ministry wrote a report on the actual land transactions and real estate traded on the black market in planned areas, and provided full information on the capital city's comprehensive planning projects for discussion at the National Assembly last month.
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