Unsubstantiated rumors about provincial mergers have stirred anxiety among small investors, prompting a rush to buy land and creating a minor "wave" in the real estate market.

Why land prices are suddenly surging

After years of stagnation, the Ben Got urban area in Tho Son Ward, Viet Tri City (Phu Tho Province), recently became bustling with property agents as land prices soared by 30-50% within a month. However, just three days later, the excitement faded, leaving the area quiet once again.

Similar trends have been observed in other localities, such as Bac Giang, Bac Ninh, Hung Yen, Ninh Binh, and Hai Phong, where the real estate market has shown signs of heating up.

In Hung Yen, the market recently caught attention with the highest auction price reaching over 158 million VND per square meter (around $6,500), while the lowest was over 66 million VND per square meter (around $2,700) during the auction of 41 land plots in Dan Tien Commune, Khoai Chau District, on March 5. These winning prices far exceeded the starting prices by 40-100 million VND per square meter.

Speaking to VietNamNet, Pham Duc Toan, CEO of EZ Property, noted that land prices in several localities have unexpectedly surged due to rumors about provincial mergers, particularly in areas predicted to become administrative centers of newly merged provinces. Many people expect these areas to receive substantial infrastructure investments, attracting residents and boosting development.

However, the price surge mainly stems from speculation and unverified information, lacking a foundation for long-term sustainability. Consequently, some areas like Phu Tho and Hai Duong have witnessed rapid price hikes followed by equally fast declines.

Toan stressed that the real value of real estate should be based on actual demand. Although relocating a provincial center might have long-term effects, it is unlikely to cause immediate changes. In less populated provinces, buying land is easy, but selling it is difficult due to the market's sluggish nature and limited buyer interest. As a result, some investors end up stuck while brokers take advantage of the situation to inflate prices and offload properties.

Rumors driving risky investments

Nguyen Chi Thanh, Vice Chairman of the Vietnam Association of Real Estate Brokers, explained that when inaccurate information spreads widely, some people deliberately create rumors to profit in the short term. Unofficial news about provincial mergers has created confusion, impacting small investors who rush to purchase land.

Currently, in some provinces like Hung Yen and Bac Giang, land prices have risen far beyond the income levels of local residents.

Thanh emphasized that land price increases driven by merger rumors lack a solid basis. The purpose of merging provinces is to consolidate potential and foster regional development, not to trigger real estate booms merely because an administrative center is relocated.

Investment risks

Toan pointed out that while establishing an administrative center may attract businesses, boost infrastructure planning, and indirectly raise property values, the risk of loss remains high if prices are pushed up too far ahead of actual development.

For example, when rumors suggested that Hai Duong would become a new provincial center, investors flocked to buy land, only to find themselves stuck later as liquidity dropped and prices fell. Similarly, speculation about merging parts of Hoa Binh into Hoa Lac led many investors to accumulate land, but the merger did not occur, causing significant losses.

“Information and quick thinking are crucial in investment decisions, but risks are always present. The higher the risk tolerance, the greater the potential profit - but when the ‘wave’ subsides, investors can easily get trapped,” Toan cautioned.

Temporary waves and long-term stability

According to EZ Property, the current market situation is just a small “wave” driven mainly by psychological factors rather than substantial economic or social changes.

“To achieve sustainable real estate growth, there must be clear planning, socio-economic development orientation, and genuine housing demand. Merging provinces does not necessarily lead to higher land prices since population density and economic growth remain largely unchanged,” Toan explained.

Even if a locality becomes a new provincial center, the increase in land prices is unlikely to exceed 20%. While the current period may present investment opportunities, risks are still significant. Investors must be prepared for the worst-case scenario, maintaining proactive financial resources and prioritizing self-financing over excessive reliance on bank loans. Otherwise, if the market turns unfavorable, being stuck with low liquidity can result in heavy losses and forced sell-offs.

Sharing a similar perspective, Nguyen Chi Thanh warned against buying land now in the hope of future price hikes after provincial mergers.

“Only areas with well-developed infrastructure, good connectivity, or long-established stability can maintain their value. Land plots in areas with development potential may hold value over the long term, but if current prices are already excessively high compared to local incomes, the likelihood of a dramatic increase is minimal,” Thanh concluded.

Nguyen Le