Credit tightening a measure to control real estate speculation

Price increases in the "tag-along" areas are just speculation

According to the Vietnam Association of Real Estate Brokers, land prices rose rapidly in localities, an average of 10% increase after a month, even increased 2-3 times in just 1-2 months in some places.

In many areas, people quit their business and production to invest in land. Bank deposits were also withdrawn for land investment.

The spreading of false news about project planning and development appeared in many localities.

Directing opinions of State leaders are even taken advantage of, creating fake documents to spread news, which has a negative impact on the interests of investors who lack knowledge and experience.

Many land brokers regularly gather in these areas to create excitement and release a lot of inaccurate information, pushing prices up to entice investors.

Facing this situation, by the end of the first quarter, the authorities of some localities have participated in controlling illegal buying and selling activities. Simultaneously, it is recommended that people be alert to rumors creating land fever.

Data from Savills’ Hanoi Real Estate Market Overview Report in Q1/2021 showed high demand in villa, townhouses, residential land, auction land, and land services. The land purchase and sale were active despite many legal warnings.

Commenting on this issue, Do Thi Thu Hang, Senior Director, Research & Consulting Department, Savills Hanoi, said planning areas or infrastructure in progress were often the basis for soaring land prices.

"Tag-along" areas or areas whose price increases based on general information should not be seen as the real cause of soaring land prices. This price increase is primarily speculative rather than based on real demand. Buying and reselling activities taking place while waiting for price increases will not reflect the actual needs of the market.

Strict punishment to control the market needed

Affirming that credit tightening can be a measure to control speculation, Hang said when Vietnam's economy was growing, the measures taken should be carefully considered because when applied on a large scale, they would inevitably create effects with a certain delay.

“We realize that projects with bank credit support have a certain source of stock. In Hanoi, the current economic indicators are still at a safe level. Based on current conditions, measures need to go from warning to prevention to stop land fever, aiming for a sustainable and stable market. Because they not only affect the real estate sector but also are related to many other economic fields,” said Hang.

According to Hang, in its efforts to control land fever, the State should consider two important factors.

First, publish full details of infrastructure development plan so that people know exactly which areas are affected by the State’s decisions.

Second, introduce strict punishment to control the market, ensuring openness and transparency in the real estate industry. Specifically, the State needs to strictly control legal conditions when investors launch their products on the market. Simultaneously, investors need to fulfill legal conditions, thus, buyers receive houses with equipment and information as committed.

In particular, the Savills’ representative was afraid the Vietnamese market had problems related to real estate brokers who did not have valid qualifications and certificates and who voluntarily pushed prices up, affecting real land prices.

Regarding this issue, the Vietnam Association of Real Estate Brokers said that subjects who released and pushed prices up, creating virtual land fever, were not a professional real estate brokerage force operating at professional and reputable real estate exchanges.

Among solutions proposed by this association to control land fever, local governments need to drastically control all activities of land use, implementation of investment projects, and land transactions in accordance with the law.

At the same time, it is necessary to manage those participating in the chain of listing, offering real estate for sale, and organizing transactions in the locality. Promptly detect and handle errant rumors affecting the market, especially fake news that causes land fever and instability in the locality.