Abnormalities in rural land auction market in Nghe An

Floor rush "make waves"?

Research on real estate transactions and land auctions in recent months shows that, compared to 2 years ago, the real estate market in the country in general and Nghe An in particular has more or less recovered compared to before. A representative of the Vinh City Land Use Registration Office confirmed this fact when he said that land transactions through the city's One-Stop Department have increased from 220 to 240 records/day compared to the previous period of about 180 to 190 records/day.

In particular, in some recent auctions, the number of applications has increased dramatically. In Hung Thong commune, although only 92 land lots were auctioned, there were 1,000 applications and the auction result reached 150 billion, nearly 3 times higher than the planned starting price of 60 billion. Similarly, the land auction in Xuan Lam (Nam Dan) in early May 2024 had a record number of applications with 1,100 applications bidding for 108 land lots.

In Do Luong district, some auctions also attracted a large number of applications, with winning prices many times higher than the starting price. In the most recent auction on August 12 in Dong Mau area, near the new administrative center of Do Luong district in Yen Son commune; the provincial auction service center auctioned 30 lots but there was a lot with a difference of 1.8 billion VND compared to the starting price (5.969 billion VND/starting price of 4.161 billion VND).

Observing land auctions, we see that the general level of rural auctions is quite active. However, the large number of applications is due to the trading floors and investors creating waves. For example, in the auction planning area in Xuan Lam commune (Nam Dan), 108 plots of land were sold, but only 7 plots belonged to local people and 101 plots were purchased by trading floors.

In Hung Thong commune (Hung Nguyen), 92 lots were auctioned but 90 lots were won by trading floors from Vinh city and other communes in Hung Nguyen. Similarly, 30 lots in Dong Mau planning area, Yen Son commune, Do Luong, were mainly purchased by outside trading floors.

Because the main purpose of the auction was to buy for investment, right after the auction ended, the floors immediately put up banners and assigned people to stand guard at the auction area to advertise for sale and enjoy a price difference of over 100 million VND/lot.This situation recurs in many areas, causing land funds in rural areas to be manipulated by speculators, pushing up land prices, more or less creating virtual waves, and the people who suffer the most are people with real needs.

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Mr. Tran Doan Phu - Head of the Justice Department of Do Luong district said: The auction participants in the district are mainly real estate floors from Vinh City and Dien Chau City. To buy land, many local people in need in Do Luong district have to buy it back from the floor at a price difference, the lowest is 70 million VND and the highest is 200 million VND compared to the original auction price...

Need monitoring and management solutions

According to some experts, the reason for the situation of brokers creating waves in land auctions in rural areas is because the starting price set for auctions in the past was built lower than the time of land fever. In addition, according to Decree No. 10/ND-CP, the maximum time to complete financial obligations after the auction is up to 4 months, so investors have the opportunity to sell; in case the winning bid is too high and after a period of time cannot sell, the possibility of forfeiting the deposit is also high...

The representative of the Property Auction Service Center, Department of Justice admitted: compared to the previous period, the auction market has become more active but the situation has not been clearly assessed. Compared to the same period last year, the auction results were better when the auction price increased by an average of 30-50% compared to the starting price. However, due to the regulation of the payment period being quite long, up to a maximum of 120 days and during that period, it is not known whether the investor paid enough money, waited for the opportunity to increase the price to hand over or abandoned the deposit?

While the auctions in rural areas are bustling, the urban areas, especially the central areas, have not yet made progress. For example, 47 land lots in the auction area of ​​Trung Thanh and Trung My hamlets, Hung Dong commune, have only sold 8 lots after 8 auctions. Mr. Tran Van Tan - Chairman of the People's Committee of Hung Dong commune said: The continuous announcement and organization of unsuccessful land auctions in the past has wasted a lot of time and affected the local infrastructure investment plan. In Cua Lo town, before the Win Wonders Cua Hoi entertainment complex was put into operation, the land auction market was bustling but the results were not high. Similarly, in Thai Hoa town, due to the reason of planning large land lots and high starting prices, there were many auctions but few buyers...

Mr. Tran Van Son - Head of Finance - Planning Department, Do Luong District People's Committee shared: The land fund exploitation auction had many participants, after the auction, there were land lots that increased nearly double compared to the starting price, which is a positive signal, the local budget has more resources for investment and development, and if well managed, the state can also collect some taxes and fees.

However, when the results were announced, it was found that most of the auction winners were not in the area, so local people who needed housing had to accept to buy back the lots at a price difference of 70-200 million VND/lot, which was really worrying because speculators were manipulating and raising the prices.

In Nghe An, there are about 25 establishments and enterprises providing auction services. Recently, the Judicial Support Department, Nghe An Department of Justice has continuously received complaints and petitions related to the conditions and capacity of auction units. After reviewing and handling, 5 auction service establishments have been fined or had to dissolve or stop operating due to violations.

Mr. Nguyen Ngoc Minh - Director of the Property Auction Service Center, Department of Justice said: To ensure that auction activities operate in accordance with the law and compete fairly, and at the same time, prevent the situation of trading floors buying and setting up virtual transactions to create waves, the authorities need to strengthen inspection, handle violations, and publicize on mass media for monitoring.

In the long term, the center recommends amending and increasing the deposit amount to 50% of the property value and shortening the time to complete financial obligations to 30 days. In addition, it is necessary to exploit information channels, monitor land transfer transactions after auction, and pay income tax if additional income is generated./.