Local Governments to Cool Land Fever

Since Me Linh was said to be merged into Hanoi, its land prices soared. The price of areas situated near streets goes up to VND16 – 17 million/m2 (more than double within a month). Even so, no one can buy land at that price when this kind of land was priced at under VND3 million/m2 two months ago. Pieces of village garden are also offered at the price of VND7 – 8 million/m2.

In Yen Binh, one of four communes in Luong Son, Hoa Binh province which is on the final list, the property market has already been heated with on-street area prices up to VND65 million/metre (in Luong Son, land is calculated in perch, hectare, or metre of street length, not square metre). Previously, the price of this sort of land was only a third of present price (approximately VND20 million/metre). The price of areas along Road No. 6 through Luong Son town now exceeds VND120 million/metre.

 

However, in both Me Linh and Luong Son, the number of successful transactions can be counted on a few fingers, as buyers and sellers are reluctant in fear of unfair price.

 

Defying predictions, there is no price fever in Ha Dong after Ha Tay province was said to totally merge into Hanoi. This is because the price was already high on the demand by big residential building projects. The price of land in Ba La (Ha Dong town, more than 15 km from Hanoi centre) increases only slightly compared to before the Tet holiday (price of residential land swings between VND3 million to VND 4 million per square metre).

 

In contrast, price of western areas of Hanoi tends to grow fast. Along the Lang – Hoa Lac road to Phung Xa, Thach That (about 20 km from Hanoi), land price has jumped noticeably. Each 90 square metres of transformed land (which is transferred from 1 perch of reclaimed cultivation land) can be offered at the price of nearly VND200 million, while it was only VND50 million one year ago. Residential land (granted with a usage right certificate) by Road No. 80 can now be sold at VND10 million/m2, whereas it was sold at roughly VND4 million/m2 before the news of merging with Hanoi.

 

Facing such movements, Hanoi People’s Committee is looking into the project “Management and Development of the Property Market” with a series of “cooling” solutions for the real estate market in Hanoi and surrounding regions.

 

Vice Chairman of Hanoi People’s Committee Vu Hong Khanh said the city would submit four groups of solutions to the Government, namely regulating primary market; controlling bank loans and credits for property trading; applying tax and financial instruments; and managing the property market by market supervision projects and public and transparent inspections.

 

For a healthy market development, the Hanoi Property Trading Centre pointed out that transparency is a must. In fact, market participants will lack necessary information if such information is not made public, or is manipulated. Consequently, property intermediaries will take this advantage and cause unreal price fevers.

 

In its proposal, it is important to make open the location, size, criteria of architecture, density of construction, work’s height and utility in projects inside the city, particularly around Hanoi’s ancient streets and core traffic routes. Furthermore, the municipal government should encourage procurement methods that select the appropriate contractors for “gold area of land”, and also carefully examine investors’ capability and project feasibility in hot locations.

 

As Mr Khanh emphasised, the tax instrument should be adopted to curb speculation and measures of constitution, bank, and finance and market management should be taken in harmony.

 

According to Hanoi Housing – Land Registration Office, the city collected nearly VND297 billion from registry fees and around VND486 billion from tax on transfers of land usage rights in 2007. Auctions of land usage rights have earned trillions of VND for the municipal budget, and contributed to urban infrastructure development. Still, revenues from land are said to be not yet proportionate with its prospects.

 

Managing and developing property market in Hanoi is hard and needs flexible adjustment without forceful intervention. Expertise view the project “Management and Development of Property Market” outlined by Hanoi People’s Committee, as based on this spirit. Therefore, the Government’s regulative role is its long-term task, stated in general objectives such as the smooth forming of property market elements; and perfecting mechanisms, policies and models of market management and development under the Government’s direction, which must show the characteristics of the nation’s capital in order to promote market development and strengthen management.

 

For 2008 – 2009, the project draws up short-term tasks as follows: Effectively implement laws of Property Business, Housing and Investment; being proactive in supervising the market and intensifying the governmental management role in Hanoi property market; dealing with land and houses of public asset, urban and residential real estates; setting up mechanism and policy for property agents and brokers.

 

Urgent solutions proposed to do short-term tasks in 2008 and 2009 are: Putting forward a proper tax policy to encourage registration and transfers of private houses and land. For state-owned property, concentrate on checking the number of public offices used by administrative agencies as well as state- owned houses. Statistical data by Hanoi Service of Natural Resource and Housing shows that the city will complete granting certificate of land usage right by 2010. Simultaneously, boosting the sale of state-possessed houses to current tenants as directed by Decree 61/CP to increase the sources of goods. As for industrial, commercial and manufacturing property, the People’s Committee will issue standards of transferring projects of hotels and office space rental, transferring work built on hired land paid in full or yearly. Policies will be proposed to foster development investment in residential buildings.