Unlike the inactive auction activity last year, a land auction in Thanh Cao commune in the Thanh Oai suburban district in early August 28 sparked heat in the suburban area of Hanoi, with 4,000 dossiers registered to attend the auction and 1,600 participants.

While starting prices were just VND8.6-12.5 million per sq m, the highest winning price surpassed the VND100 million per sq m threshold.

An auction of 19 land plots in Long Khuc area in Tien Yen commune in Hoai Duc district on August 19 had the highest winning price hitting a peak of VND133.3 million per sq m, which was 18 times higher than the starting price of VND7.3 million.

A senior official of the Hanoi Department of Natural Resources and the Environment told VietNamNet that right after the auctions in Thanh Oai and Hoai Duc the bidding prices continued to increase, with prices at the next auctions higher than the previous ones, and said that the prices were "abnormally high".

Other land auctions in suburban districts also saw bidding prices surpassing the VND50 million per sq m threshold.

New records have been repeatedly set at the latest land auctions in Phuc Tho district with the highest winning prices rising from VND60 million per sq m at the first auction to VND69.8 at the second auction and VND75 million per sq m at the third one. 

However, the number of bidders at the auctions were fewer than the previous auctions in other districts.

At the August 29 auction, for example, 39 land plots were put up for sale, while there were 650 dossiers and 350 investors registered to attend.

On September 10, 47 land plots were auctioned; there were 416 dossiers and 180 investors. On September 16, there were 140 dossiers and 75 investors.

One month after the auction of 68 land plots in Thanh Cao commune in Thanh Oai district (August 10) which stirred up the public because of surprisingly high winning prices, agencies reported that 80 percent of winners had given up the deals, accepting to lose the deposits. 

All the investors winning the right to buy the land plots at the prices of VND80-100.5 million per sq m had not paid the money.

On September 18, the auction of 32 land plots in Bach Da hamlet in Kim Hoa commune in Me Linh district stopped the succession of auctions where the winning prices were higher than VND50 million per sq m, which had lasted one month. At the auction, the highest winning price was VND48.9 million per sq m.

Commenting about the news that 80 percent of investors in Thanh Oai had given up, Pham Duc Toan, CEO of EZ Property, said it was not a surprise at all. This proves that the majority of winners are speculators and they don’t have demand for accommodation. 

After appropriate agencies inspected land auctions, the winning prices at other auctions did not see considerable changes. The starting prices at the auctions were relatively high and required deposits were between VND400 million and VND1 billion. 

Analysts commented that as the required deposits were high, and this helped restrict speculation.

Toan advised people to assess land value with consideration for the development potential of the areas, buyer interest, and price fluctuations.

“Buyers need to observe the market in order to set reasonable winning prices and avoid the price spiral artificially created by speculators,” he said.

Land inflation blows people’s housing dream away

Dinh Trong Thinh, a respected economist, said the real estate market will be affected by the bidders’ behavior of bidding high prices at auctions and then giving up the deals.

This creates an "artificial land fever" which pushes up market prices and creates a chaotic market.

Because of speculation, people cannot buy homes, and only a small group of investors can benefit from this. People need to be cautious when buying land in these areas.

One of the consequences of this is a decline in state budget collection. In Thanh Oai district, the total amount of money collected from the August 10 auction was VND80 billion, just 20 percent of the amount expected.

Hong Khanh