The main reasons behind a dramatic increase in Hanoi’s real estate prices were highlighted in a report submitted to the National Assembly by the Government.
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| Property market in the western area remains hot (Illustrative photo) |
According to its contents, housing and land prices in Hanoi have surged since the third quarter of 2009 by 15-20% compared with the second quarter. The prices of the second half of the first quarter and early second quarter of 2010 went up 30% on average compared to the last quarter of 2009. It even increased 40% in some areas.
However, transaction volume and price increase are not the same in all areas. Land prices in Ha Tay started rising gradually even before it was merged into Hanoi. In remaining areas, the prices have rebounded since the early first quarter of 2010.
Most transactions have been made by speculators. According to the Hanoi Tax Department, taxes levied on property transactions for the first 5 months in Quoc Oai, Thuong Tin, Ba Vi and Thach That districts was over VND7.6 billion ($396,000) only, not an impressive figure.
Marking up prices, property information exaggeration, and bubble property transactions are believed to be the main causes of rising prices, especially in Thach That and Ba Vi districts. In addition, real estate trading in surrounding areas of Hanoi are geared towards speculation to make profit, not at housing.
According to the report, reasons for the increase in land prices in these areas is that supply could not meet demand. Vietnam still needs much more residential housing, social infrastructure construction, office spaces and hotels.
Furthermore, investing in property is believed to be safer and more profitable than securities or gold markets causing many to pour their money into property.
The Hanoi Master Plan for construction to 2030 with a vision towards 2050 is also a major factor of land valuation growth.
