Rising housing prices was a topic of discussion raised at the government’s September regular press conference held on October 7.

Deputy Minister of Construction Nguyen Viet Hung cited three major reasons behind the real estate price hike: supply-demand imbalance (demand is much higher than supply), speculators’ behavior of inflating prices, and increase in input costs caused by higher construction costs and higher land rents.

According to Hung, the 2015 Penal Code (amended and supplemented in 2017), the Law on Competition, the Land Law, and the 2023 Law on Real Estate Business all clearly have regulations that control attempts to inflate prices and manipulate the real estate market.

Local newspapers have reported that many land auctions in some localities have been postponed, and many investors after winning bids after inflating the prices have given up, thus distorting the market and not truly reflecting the demand and supply situation.

The reports of real estate service providers also confirmed sharp apartment price increases. Savills, for example, has reported that apartment prices in Hanoi have hit VND70 million per sq m, and Hanoians will need 50 years to be able to buy a mid-end apartment.

Local newspapers pointed out that auction award prices were far times higher than the starting prices.

Prime Minister Pham Minh Chinh has requested the Ministry of Natural Resources and the Environment (MONRE), MOC, local authorities and other agencies to deal with the problem.

Implementing the Prime Minister’s instruction, MOC has submitted a document that analyzes the real estate market, with information about cost prices, selling prices, and reasons for real estate price increases. It suggests solutions to force the prices down and stabilize the market.

MOC has also asked local authorities to strengthen control and supervision over real estate price performances. In both documents, MOC requested local authorities to intensify inspection of the implementation of regulations and prepare solutions to prevent and handle violations.

Increasing supply to satisfy demand is expected to be a crucial solution to force prices down, and to do this, it is necessary to create favorable conditions for investors to fulfill administrative formalities to implement real estate projects.

Particularly, MOC has proposed that the government ask MONRE and other agencies to consider setting up a real estate trading center under state management.

Thu Hang