Ministry of Construction explains the reason for the "dizzying" increase in real estate prices

From rising land costs

Firstly, real estate prices increased partly due to recent increases in land-related costs as well as the impact of the new land price calculation method and table.

Especially in some localities and areas, there is a phenomenon of land use rights auctions with winning bids many times higher than the starting price.

The management and implementation of land use rights auctions in some areas and localities are not good; there is a phenomenon of many investors forming associations and groups to participate in auctions; paying land prices many times higher than the starting price, and then possibly "abandoning the deposit" after winning the land auction with the aim of establishing a virtual price level in the area to make a profit...

The auction of land use rights with the winning bid being many times higher than the starting price will have the impact of increasing the land price level, real estate price, housing price of the neighboring area and the locality; at the same time, it will increase the cost of implementing housing projects, causing difficulties for businesses, reducing supply to the market, negatively affecting the real estate market.

Second, the phenomenon of "creating virtual prices" and "inflating prices" by speculators and individuals working as real estate brokers; taking advantage of people's lack of knowledge and investing according to the crowd psychology to make profits.

These are individuals who operate as freelance brokers, do not have real estate brokerage certificates, are weak in expertise, have limited legal knowledge, lack professionalism, and are weak in business ethics, leading to opportunistic business practices, colluding to raise prices, inflating prices compared to actual values, manipulating the market, causing damage to customers, and reducing the transparency of the real estate market.

To lack of supply

Third, there is a lack of real estate and housing supply to meet the needs of the majority of people, low-income and middle-income earners in urban areas, especially Hanoi and Ho Chi Minh City.

When the Land Law, Housing Law, Real Estate Business Law and some related laws have not been amended, real estate businesses face difficulties and obstacles from overlapping, inconsistent and non-specific legal regulations.

In addition, many businesses are facing difficulties in obtaining credit loans and capital from issuing corporate bonds. Many projects that have been or are under construction have had to be temporarily suspended, delayed, or have their construction progress slowed down.

Currently, after the Land Law 2024, Housing Law 2023, Real Estate Business Law 2023 were promulgated and came into effect, difficulties in terms of institutions and legal regulations (land, housing, real estate business, credit, etc.) for enterprises have been promptly adjusted and amended by the legal system, and have basically overcome the shortcomings, limitations, and inadequacies of previous legal regulations. However, in order for newly promulgated mechanisms, policies, and laws to "come into life", it takes time to permeate and implement.

Fourth, the recent economic fluctuations related to the stock market, bonds, gold, etc. have affected the psychology of people and investors, leading to a trend of shifting people's and investors' cash flow to investing in houses and land as a safe "haven" for accumulated money and investment capital.