Land Auction Frenzy in Thanh Hoa Province

Recently, a vulnerable district in Thanh Hoa province auctioned off eight land plots, surprising many with the overwhelming interest; despite the narrow access road, hundreds signed up and submitted deposits.

Among those who bid were local residents seeking homes for their future families. Unfortunately, they were unable to compete with investors and speculators from their commune and beyond, who drove the bidding prices up 2-3 times the original amounts.

Following the auction, the sold land plots were quickly re-listed for sale at prices VND50-70 million higher. Those who missed out on the auction began exploring land purchases in adjacent areas, only to discover that local land prices had surged significantly.

It was not surprising that prices doubled after the auction. For example, in Ho Chi Minh City’s Thu Thiem district, four plots were auctioned for VND2.4 billion per square meter, a figure that attracted media attention, deeming it the world’s highest land price.

Although the winning bidders later withdrew from their deals, the land values in Thu Thiem remained elevated.

Similar anomalies were detected in land auctions in Quoc Oai and Hoai Duc districts of Hanoi. In Hoai Duc, despite a starting price of VND7.3 million per square meter, bidders pushed the price to VND133 million, an astonishing 18 times the initial figure. Bidders expected higher prices, but not to this extent.

Plots in the Duong Noi area that previously sold for VND70-80 million per square meter are now priced 2-3 times higher, a stark contrast to recent auction prices in Hoai Duc that reached VND100-130 million.

Experts suggest that speculators employ various methods to drive up land prices. By registering for auctions and placing high bids, they artificially inflate prices, establishing auction figures as the new market benchmarks.

The exorbitant auction prices are reshaping the real estate sector, enhancing land speculation and creating a monopolized market. Speculators can profit immensely, raising market values almost overnight, while analysts caution that this trend jeopardizes the financial wellbeing of genuine buyers.

This rising land inflation threatens to create a real estate bubble that could adversely impact the economy and limit housing access. A report indicated that since 1990, land prices in Hanoi and Ho Chi Minh City soared by 400 times compared to a 40-fold increase in average incomes, widening the affordability gap.

Though high land sales boost local government revenues, excessively high prices deter potential investors, leading to a stagnation of development projects and, consequently, fewer job opportunities.

For investors, excessive land costs heavily influence their total investment, and inflated prices may deter them from pursuing new projects in certain areas.

Experts recommend implementing measures to stabilize the real estate market, including raising the required deposit for bidders, currently set at 20% of the starting price. This modest deposit allows speculators to gamble without significant risk.