Nghe An: Land prices cool down, many transactions see deposits cancelled.

In March 2021, land prices surged throughout Nghe An province, with investors visiting land auction sites daily to make purchases. (Photo taken at the Tang Thanh land auction area, Yen Thanh district). Photo: Van Truong

Many investors forfeited their deposits.

In Yen Thanh district, the land market was booming before Tet (Lunar New Year), with auctions attracting huge crowds. In rural areas, throngs of people flocked to buy and sell land, but now the activity has significantly decreased, and land prices are showing signs of stabilizing.

Mr. Tran Van M. from Nam Thanh commune (district)Yen ThanhHe stated: "Back in 2020, I invested in four plots of land in various communes. In March 2022, a buyer offered 500 million VND more per plot, but I didn't sell because I expected the price to continue rising. Recently, I've wanted to sell, but I haven't been able to get rid of them!"

A real estate broker in Yen Thanh district said: Recently, the number of calls and messages inviting people to view land has decreased significantly, and many people have even withdrawn their deposits and not proceeded with the transaction. In some communes in Yen Thanh district, land auctions have been successful, but there are still concerns about investors abandoning their deposits because the land prices remain high. For example, in Xuan Thanh, Long Thanh, and Hoa Thanh communes, land after winning the auction fetches between 1.5 and 2 billion VND.

Similarly, in Dien Chau district, the once vibrant real estate market has suddenly become sluggish. According to some real estate agents, the number of people viewing real estate projects in Dien Chau has dropped significantly in the past few weeks, and some people who had previously put down deposits have now withdrawn their offers.

For land plots in the communes, transactions are also slow, and some buy-and-sell deals have resulted in "abandoned deposits." Mr. Nguyen Nam M. from Dien Ngoc commune shared: "More than a month ago, I put down a deposit for a land plot in Dien Loi for 2.3 billion VND. After waiting 20 days to resell it, no one inquired, so I had to forfeit my deposit of 100 million VND. It's better than having to bear the interest on the 2.3 billion VND bank loan."

Since April 15th, land prices in rural areas have cooled down, and auction sites have been deserted with few transactions. (Photo taken at the Dien Phuc land auction site, Dien Chau). Photo: Van Truong

Our research shows that investors with strong financial resources, who invest with their own capital, are not selling at a loss or reducing prices during this period. However, many people who have borrowed from banks but have their capital tied up in real estate find it very difficult to sell at a loss.

The phenomenon of deposit forfeiture is partly due to the excessively high starting prices for land auctions in some localities. For example, the land use rights auction notice in Quynh Xuan ward, Hoang Mai town on April 9, 2022, showed 44 land plots with starting prices ranging from a minimum of 2.5 billion VND to a maximum of over 4.4 billion VND. In Tan Thanh mountainous commune (Yen Thanh district), some land plots had starting prices close to 4 billion VND.

In the districts of Do Luong and Hoang Mai town, during the peak of the auction season, some land plots fetched prices as high as 5.5 to 6 billion VND. However, according to some investors, the prices were artificially inflated, and with the current cooling and stagnant market conditions, those plots are likely to be abandoned.

Tighten control over the real estate market.

There are several reasons for the recent cooling of the real estate market. First and foremost, it's due to banks restricting credit for speculation.real estateSome banks have temporarily suspended the disbursement of real estate loans, even those with approved applications, in order to review their entire systems. Meanwhile, many localities have temporarily halted the processing of procedures related to land subdivision and are controlling real estate business activities in their areas.

In the Lum Hoa area of ​​Hoa Thanh commune, Yen Thanh district, many investors have yet to sell their properties. Photo: Van Truong

Authorities in Nghe An province are also strengthening inspections, checks, and management of real estate exchanges and businesses. Real estate exchanges in the province will have to submit periodic reports on their business activities and real estate transfers conducted through the exchange, and will be responsible for the documents and information provided. At the same time, they are cracking down on developers of residential and urban development projects that have not yet met the conditions for sale but have already transferred or sold properties "off-plan" in the form of capital contributions.

The Nghe An Tax Department is strengthening its management of business activities and real estate transfers by individuals and businesses. Tax branches are coordinating with the People's Committees of districts and cities in the province to manage and combat tax evasion.

Mr. Nguyen The Phiệt, Head of the Housing and Real Estate Market Management Department of the Nghe An Department of Construction, added: "In recent times, the Government and relevant departments have taken measures to curb the 'land fever' situation. Media outlets have actively participated, so many people are no longer frantically buying land, and investors are more cautious when investing in real estate."

The infrastructure in Long Thanh commune, Yen Thanh district, also saw few transactions. Photo: Van Truong.

In the coming period, the Department of Construction will continue to widely disseminate legal regulations on real estate investment and business so that businesses and people are aware of and comply with the regulations; and will continue to thoroughly understand and advise the Provincial People's Committee to direct the effective implementation of the Prime Minister's Directives on some solutions to promote the stable and healthy development of the real estate market.

In addition, it is necessary to effectively manage real estate transactions, strictly control misleading sales information and advertising content aimed at illicit profit; and regularly publish and update complete information on the status of real estate projects in the province, including projects that meet the conditions for putting real estate into business and those that do not, so that people can promptly grasp information about the real estate market.

Real estate inventory decreased by nearly 22%, while home prices rose slightly.

Overall in 2014, real estate inventory decreased by 21.8%; some projects in good locations saw house prices increase by about 1-2% compared to 2013.

Despite falling property prices, buyers remain cautious.

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