A view of property projects developed in Hoai Duc Commune, Hanoi.
Industry insiders have urged that careful consideration be given to Hanoi's proposal to raise land prices in the capital, warning that the move could further weigh on an already overheated property market.
The Hanoi Department of Agriculture and Environment has completed a draft land price framework to be applied from January 1, 2026, which proposes increases in most areas. Under the draft, prices in downtown areas are proposed to rise by around 2 per cent, while those in suburban areas could increase by up to 26 per cent.
The municipal department said that as the land price framework serves as a basis for land-related policies and investment attraction, the proposed increases aim to narrow the gap between official land prices and actual market prices and to harmonise the benefits among the state, land users and investors.
Experts, however, warned that the proposal could add fuel to the fire amid surging housing prices in the capital in recent years. Adjusting the land price framework is necessary to better reflect market values and boost budget revenues, they said, but a lack of control and of a clear roadmap for implementation could worsen the situation.
Nguyen Van Dinh, president of the Vietnam Association of Real Estate Brokers, said increasing the land price framework in an unreasonably inflated market would mean the government inadvertently validates distorted values and creates a new, unsustainable price floor.
'If market prices are being artificially inflated, the state's new price framework will only reinforce that distortion,' he said.
The new land price framework would become a tool anchoring inflated prices, making it harder for the market to correct itself, Dinh said.
He added that higher official land prices would push up costs for real estate developers, which would in turn push up selling prices and make housing far more unaffordable for most home seekers.
According to Tran Xuan Luong, deputy director of the Vietnam Association of Real Estate Brokers' Institute of Research and Evaluation, increasing land prices at this moment is not in line with the government's directive on controlling housing prices to cool the market.
Land-related expenses typically account for around 30 to 50 per cent of total real estate development costs, he said, adding that when official land prices are increased, every component cost from compensation and site clearance to financial obligations will also rise.
While upgrading the land price framework is necessary to bring it into line with market values, Luong said it is important to develop an appropriate roadmap for adjustment that is supported by solid data.
More importantly, he said, any adjustment in land prices must be implemented in tandem with related policies on taxation, the development of land databases and the valuation process. 'If land prices are raised in isolation without improving the taxation system and market transparency, the policy could further destabilise the market,' Luong said.
He urged the government to temporarily delay approval of the new land price framework until the land database, valuation and taxation policies are developed.
In a document sent to the Hanoi People's Committee, the Vietnam Real Estate Association (VNREA) acknowledged that revising the land price framework is necessary to better reflect market values, but said timing and implementation must be handled with caution.
The association warned that land price increases at this moment could push up housing prices, slow public investment projects and undermine the capital's competitiveness.
'Land price adjustment is essential, but it must balance the interests of the government, businesses and the public,' VNREA president Nguyen Van Khoi said.
VNREA outlined key issues for Hanoi to consider before approving the new land price framework, including ensuring fair land access for businesses, assessing impacts on competitiveness and gross regional domestic product (GRDP) growth, avoiding cost overruns in public infrastructure projects, supporting the government's goal of stabilising housing prices and ensuring social welfare.
As land is an important production input, increases in land prices could ripple through related sectors such as construction, materials, banking, production and business, which could threaten macroeconomic stability and economic targets, the association said, adding that land valuation should aim to enhance land access for businesses.
VNREA particularly warned that land prices in suburban areas where affordable housing projects are expected to be developed are also rising sharply, which could undermine efforts to increase the supply of affordable homes.
The association said higher land prices could raise investment costs, delay project implementation and weaken competitiveness, which it argued is not reasonable in the context of the government's target of double-digit growth from 2026 and Hanoi's aim of an average GRDP growth rate of 11 per cent per year during the 2026 to 2030 period.
In addition, higher land prices could increase financial burdens on developers and undermine the attractiveness of housing projects, which might worsen the shortage of housing supply and further push up prices, straining the government's efforts to cool the real estate market and ensure social welfare.
VNREA emphasised the importance of improving the regulatory framework for land management to ensure transparency and accurately reflect the true value of land use rights, urging that land valuation be carefully studied to avoid unexpected economic and social impacts.
Lawyer Nghiem Thi Hang from the Hanoi Bar Association said Hanoi needs to develop an appropriate roadmap for adjusting land prices to prevent shocks that could heavily affect daily life, production, business and the wider economy.
Under the draft proposal from the city's Department of Agriculture and Environment, Hanoi plans to adopt a new land price table from January 1, 2026, with 17 zoning areas instead of the current district-based system.
The highest proposed residential land price of more than VND 700 million per square metre would apply to streets in the former Hoan Kiem District, up about 2 per cent from the current rate.
Land prices in suburban areas such as An Khanh, Hoai Duc and Dan Phuong are proposed to increase by up to 26 per cent.
