Thu Thiem Land Auctions: High Prices Lead to Multiple 'No's' for Buyers

A land auction in Tien Yen village, Hoai Duc district, Hanoi, ended early this morning after 18 hours. 19 land plots were sold. The highest winning price was 133.3 million dong per square meter, 30 times the starting price. The lowest was 91.3 million dong per square meter, 12.5 times higher than the start.

These winning bids were 2-3 times higher than normal market prices. According to Batdongsan.com.vn, the average asking price for land in this area last quarter was about 43 million dong per square meter. This was already up over 48% in the past year.

This unusual jump in land prices didn't just happen in Hoai Duc. It also occurred in Thanh Oai district. There, land auction prices a week earlier ranged from 63 to 100 million dong per square meter. This was 2.3 to 3.7 times higher than normal market prices.

The strangely high prices from these two recent auctions have raised worries. Some think groups with special interests or land brokers, also called "middlemen", are pushing up prices to trick people. They might buy a few plots at high prices to raise prices in the area. Then they can sell other plots at lower prices and later cancel their deposits. This is why people compare these auctions to the Thu Thiem land auction before, where prices went up to 2.4 billion dong per square meter.

Mr. Dinh Minh Tuan, Director of Batdongsan.com.vn in the South, is worried about bad effects on the real estate market and local economic growth. When auction prices are very high, it pushes up land prices in nearby areas too. This creates a new, hard-to-control price level. People who own land in these areas tend to increase their selling prices to keep up with the market. This makes local property prices keep going up.

Professor Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, agrees. He thinks the high land auction prices in Hanoi's outer districts, 30-40km from the city center, are unusual. Prices over 100 million dong per square meter seem strange.

He points out a problem. Many shops in central Hanoi are closed as online shopping grows. But land prices in outer areas are rising fast. This shows business people are affecting prices. As a result, people buy land for investment and leave it empty. The land isn't developed, but its price keeps going up as money is put into it.

"Outer area land prices are so high that normal people can't afford them," Mr. Vo says.

Hanoi's property market has seen prices rise non-stop. Prices go up monthly, even daily. Some apartment buildings have seen 50-100% price increases in just two years. Since the Hoai Duc and Thanh Oai land auctions, prices have jumped even more, pushing the market higher.

This trend worries experts. They fear young people and those with average incomes won't be able to buy homes. The gap between rich and poor might grow. Also, if prices keep rising, it could lead to a market crash. This would hurt both buyers and sellers.

Mr. Nguyen Quoc Anh, Deputy CEO of Batdongsan.com.vn, says apartment prices in Hanoi's outer areas have reached 60-80 million dong per square meter. In the city center, prices are around 150 million dong per square meter. Five years ago, these were the prices in Ho Chi Minh City. Now, some apartments there cost 150 million dong per square meter, and some even 200 million.

Property prices were already high due to low supply. Now, land auctions are pushing prices up more. Many worry home prices will keep rising until the end of the year. If property prices keep going up without control, it could cause big problems for society. Some fear a whole generation won't be able to buy homes.

As home prices keep rising, a young person born in 2005 who lived in Hanoi for a while shared their thoughts. This caused a lot of talk: "There will be a generation that can't buy homes... Normal office workers almost can't buy homes. I often think deeply and ask myself how much more I need to study and work to afford a home..."

The facts show that without family financial help, young people need to earn 30-45 million dong monthly to buy a home. But most young workers only make 10-15 million dong per month. Without family support, it's very hard for them to buy a house. Usually, they can only reach a 30-40 million dong salary by age 30. Also, from graduation to age 30, land and house prices can rise fast. A 3 billion dong home could go up to 8-10 billion.

Talking about high house prices making a whole young generation unable to buy homes, Mr. Nguyen Xuan Phu, Chairman of Sunhouse, said: "Property prices are just numbers, while the use value stays the same. A house worth 1 billion dong years ago might cost 10 billion more now. Its use value hasn't changed, but this puts pressure on wages, which make up most of product and service costs."

High House Prices Push Young People to "Avoid Marriage, Delay Children"

Rising house prices not only make it harder for young people to buy homes, but also affect normal life events like getting married and having kids. A quick survey on the VTV24 Facebook page about why people want to marry after 30 showed that 62% of about 400,000 young people chose to marry later because of money worries.

The Vietnam Association of Realtors (VARS) says more young people are "avoiding marriage and delaying children" due to high house prices. This comes from money problems, which are greatly affected by house prices. As house prices go up, rent also increases, putting pressure on people's living costs. Many young people think they should buy a house before getting married or having children. But because house prices are so high now, it's not easy to buy. So they work very hard to save money for a house, missing the best time to start a family and have kids.

Rent and monthly living costs eat up most of young couples' salaries, making many only have one child or wait to have kids. In fact, Ho Chi Minh City, which has the highest house prices in Vietnam, also has the latest marriage age and lowest birth rate in the country.

From 2016 to 2018, house prices in Ho Chi Minh City kept rising and hit new highs. During this time, Ho Chi Minh City also had the highest cost of living index (SCOLI) in Vietnam.

Since 2019, while Ho Chi Minh City house prices grew slower, Hanoi house prices kept going up fast. Hanoi also became the most expensive city in Vietnam. Now, Hanoi's apartment prices seem to be following Ho Chi Minh City's market from 5 years ago. Prices in Hanoi are now close to 80 million dong per square meter, almost the same as Ho Chi Minh City. The marriage age in Hanoi is also getting higher, with birth rates dropping.

Experts say high house prices make young people "afraid to marry and have kids." This causes a lack of young workers, lower work output, and more social costs. It's especially bad for aging population issues. In the next 30 years, Vietnam will have over 30 million old people, about 25% of the country's population.

High house prices are hurting a whole young generation. Recent auctions with very high winning prices and strange signs make people worry about a second "Thu Thiem bomb." Also, sudden land price increases in auctions will push up all land prices. This takes away the chance for millions of people to own homes. In the end, it will cause problems for the market and society. It will break the government's efforts to ensure social welfare and lower house prices.

Many young couples spend most of their pay on rent and living costs. This makes them have only one child or wait to have kids. Ho Chi Minh City has the highest house prices in Vietnam. It also has the oldest marriage age and lowest birth rate in the country.

Source: cafef.vn