Amid surging land prices in Hanoi following the announcement of the Red river zoning plan, timely intervention from local authorities has ensured prices cool down.

Land fevers cause market imbalance. Photo: Khac Hanh

Since last year, Hanoi has kicked start the zoning plan process of the spacious riparian areas of the Red River as land resources in the city have fast become  scarce amid rapid economic development, with the announcement of the plan set to take place in June.

Despite the lack of information on the zoning plan, since early March, people had rushed to buy lands at districts believed to be included in the plan and heated up land prices in the local property market.

Late March, the Standing Committee of the municipal Party Committee issued Announcement No.180-TB/TU urging local districts and wards to step up supervision activities in land management to prevent cases of taking advantage of legal loophole for gaining unfair gains from land speculation.

The Hanoi People’s Committee on April 22 instructed the Departments of Planning and Investment and of Architecture to work with related agencies in reviewing the abnormality in rising land prices, while ensuring transparency in information regarding land plan to avoid the spread of false rumors on land projects in the city.

Drastic moves from Hanoi’s authorities immediately led to a sharp decline in land prices in the city. At An Khanh ward, Hoai Duc district, land plots in March were around VND70 million (US$3,000) per square meter, but have been lowered to VND62-65 million (US$2,700-2,800) due to the lack of demand.

Prices of property in Nam An Khanh residential area, previously skyrocketing to VND65 million (US$2,800) from VND35 million (US$1,500) per square meter after Tet holiday, have also gone down to VND55-60 million (US$2,380-2,600).

Similarly, prices also went down in Thach That and Dong Anh districts by 5-10 million (US$216-432) per square meter.

Key to ensure transparent land information

General Secretary of the Vietnam National Real Estate Association (VNREA) Nguyen Van Dinh lauded the authorities’ timing intervention to stabilize the property market.

“Tightening credit into the real estate market and strict management of changes in land use purpose were key factors to prevent land speculation,” Dinh told Hanoitimes.

Many provinces/cities, including Hanoi, have also held district and ward leaders accountable in the event of a sharp rise in land prices.

Deputy Director-General of the General Department of Land Management under the Ministry of Natural Resources and Environment Mai Van Phan attributed the surge in land prices in certain localities to the lack of transparency of projects.

“Land brokers are exploiting the miscommunication between the authorities and the land buyers to heat up the market,” Phan explained to Hanoitimes, saying this is a lesson for real estate management.

“In the coming time, the General Department of Land Management would review the land management process at 26 provinces/cities,” he added.

Sharing the view, Lawyer Hoang Van Doan from the Hoang Hung Law Firm said state agencies are expected to better supervise the process of land planning, as leakage of information prior to official announcement would cause land prices to surge.

“A heating up property market only benefits a few people, and latecomers will be losers when the market turns sideways or even freezes,” economist Vu Dinh Anh warned.

“This would be much worse if they are using financial leverage to buy lands, especially as interest rates may go up due to high inflationary pressure,” Anh said.