Earlier this year, Nguyen Thi Chau, an investor in Hanoi, decided to use her savings and borrowed money to buy a 1,000 sqm land plot in Hoa Binh for VND4 billion. Some months later, a broker called her and asked if she wanted to sell the land plot at VND5 billion. Chau did not do so because she believed that land prices would increase further in the future.

However, contrary to Chau’s prediction, there have been very few transactions. Chau is nervous as she cannot sell the land to pay debts. She told a broker that she would sell for VND4.3 billion, but she still cannot find buyers.

Like Chau, Nguyen Thi Huong in Ba Dinh district in Hanoi is also worried as she still cannot sell a row house in the suburbs which she bought at VND6.5 billion. If the house is not sold, Huong will see her capital "buried" in the land for a long time.

Nguyen Van Tien in Cau Giay district in Hanoi is offering to sell a 100 sq m land plot in Thach That. At first, he set the price of VND1.5 billion, but later, because there was no buyer, he lowered the price to VND1.2 billion, while he had to spend VND1.5 billion to buy the plot last year.

Tien was worried that land fever is over and his money will get stuck.

“As the price of land is too high, local people cannot buy land. Urbanites don’t want to buy land in the countryside,” he said.

Ads about the sale of land plots in the suburbs and city neighborhoods can be found everywhere, including newspapers and social networks. The owners of land plots say they are selling at a loss as they need money to pay debts.

The reports from some real estate consultancy firms all show that housing prices have become too high and unaffordable for most people. 

According to CBRE Vietnam, semi-detached villas have prices averaging over VND160 million per sq m, an increase of VND50 million compared with the same period last year.  The prices in the secondary market have also gone up 5-17 percent compared with the same period last year.

According to batdongsan.com, residential land prices have increased in suburban districts of Hanoi, such as Chuong My (74 percent), Quoc Oai (26 percent), Gia Lam (21 percent) and Dong Anh (20 percent). 

The land prices in provinces have increased by 10-20 percent over the same period last year. The price increases are even sharper, 30-40 percent, for land plots located in advantageous positions. In Bac Ninh and Bac Giang provinces, land prices have also risen by 20-30 percent.

In Q2, townhouses in Hung Yen were offered at VND120-160 million sqm, shophouses at VND146-184 million per sq m, and villas at VND126-194 million.

According to the Vietnam Association of Realtors (VARS), market liquidity has been decreasing, especially compared with the land fever period in H2 2021 and earlier this year. The easy-money period is now over, and banks are pursuing a cautious credit policy.

With few transactions, the market is gloomy. Transactions are believed to be carried out mostly by speculators and brokers who try to create artificial demand. 

Analysts said the bubble is becoming larger and will burst one day when people have to sell land and houses at a loss. The weak liquidity of the market has had adverse effects for investors and those who want to buy housing for accommodation.

VARS chair Nguyen Van Dinh noted that it is now "easy to buy, difficult to sell". As buyers become more cautious and hesitate to buy real estate, it is difficult to sell products at this moment. Meanwhile, capital flow congestion will freeze real estate projects.

VARS advised investors, especially those who use financial leverage, to become very cautious when buying land and houses at this moment. 

Nguyen Quoc Anh, deputy CEO of batdongsan.com.vn said investors need to have deep knowledge about the market and thoroughly analyze information about policies, investment capital and price levels.

Duy Anh