Deputy Prime Minister Hoang Trung Hai has requested local authorities to take tougher measures to stabilize land prices, in a move to help put inflation under control.
Land price frames for major Vietnamese cities in 2011 are almost unchanged from last year and is, thus, expected to make no impacts on the local property market.
The new price sets the minimum price of land in Hanoi at VND2.34 million per square meter. The highest prices, in and around certain streets in Hoan Kiem District, such as Hang Ngang and Hang Dao, will be VND81 million per square meter.
In HCM City, land prices will stay the same as last year for 2,885 out of the 3,003 streets listed in the price frame. Streets such as Dong Khoi, Nguyen Hue and Le Loi will retain the highest values, at VND81 million per square meter, while streets with the lowest values will be VND110,000 in Can Gio District.
Local analysts, however, said the frames, which are basis to make compensation for project site clearance, are not realistic and unfair because it is much lower than the real price on the market.
In fact, land prices have kept increasing in Vietnam amid the gold price spike since the Vietnamese people still have the habit of calculating land price in accordance with gold.
The analysts warned of a real estate bubble, saying that overheating real estate market would hurt the country’s macroeconomic stability.
The real estate bubble is the accessory to inflation, and it should be considered as the “dangerous germ” which must not be allowed to live together with a healthy economy, they said.
In 2008, the U.S. witnessed the worst financial crisis in the last 80 years. The crisis originated from a swelling real estate bubble.
The real estate market in Vietnam recently has shown characteristics similar to the U.S. real estate market during the crisis, the analysts noted.
People are still rushing to purchase real estate which in turn is leading to virtual growth since the actual value does not increase. “If the situation does not improve the real estate bubble is due to burst in a matter of days,” they said.
In the world, every family spends 33% of their monthly income to pay debts for their house. Meanwhile, in large urban areas in Vietnam, the figure may reach 80%.
Statistics from the central bank showed that commercial banks in Vietnam had lent VND228 trillion to the local real estate sector by Dec 31 last year, rising 23.5% from end-2009.
Vietnam’s consumer price index (CPI) rose 11.75% last year, in which gold registered a 30% increase. The country targets to curb the CPI at below 7% this year. (Vietnamplus)
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