Nghe An real estate market: Quiet, unpredictable

Sideways trading

Compared to the first months of the year and especially the first few months after opening,economic recovery after the Covid-19 pandemic(from March 15), like the whole country, Nghe An real estate market currently has a large decrease in the number of transactions.

For the auctioned land segment, except for some auctions at the end of March and April, when society returned to normal after the pandemic, some successful land auctions still had positive results, with auction prices increasing by 100% compared to the starting price.

However, since May, sales transactions have decreased significantly as land auction notices have fewer buyers and auctioned lots only increased by 5% to 7% compared to the starting price.

At this time, due to the cooling of land prices, the phenomenon of groups of people going to check and trade land has decreased compared to April and May. Photo: Internet

In Do Luong district, the center of Nghe An real estate market in the first months of the year, the starting price for auction was set at a fairly high level. After organizing a number of auctions at the beginning of the year quite well, Do Luong district is planning to continue auctioning some areas in early September, with land lots having an average area of ​​150-200m2.²but the lowest is 1.7 billion VND and the highest is over 3 billion VND.

In Nghi Loc district, according to the representative of the district's Finance and Planning Department, according to the auction results in April and May, the number of people buying documents in the areas of Nghi My, Nghi Phuong, Nghi Van communes near Provincial Road 534 was less, the auction price did not increase much compared to the previous starting point; in particular, some plots of land in Nghi Van and Nghi Phong communes were quite far from the center, so there were few buyers and it took many auctions to sell. Recently, there were a few cases where the deposit was waived despite the successful auction.

Investing in infrastructure for resettlement areas combined with land exploitation in Hamlet 5, Nghi Phu Commune (Vinh City). Photo: Nguyen Hai

In Vinh City, since the beginning of the year, the city has auctioned 273 plots of land in locations that had no buyers before. Compared to the beginning of the year, which increased quite strongly, now it has only increased by 5% compared to the starting point and there have been 9 cases of deposit cancellation. Most recently, the city put 112 plots up for auction, but after 3-5 times, only 13 plots were sold, the remaining 89 plots will have to continue to be auctioned in the coming time.

A representative of the Vinh City Land Fund Exploitation Center shared: According to regulations, if after completing the notification and auction procedures 3 consecutive times, no one submits documents and no lot is successfully auctioned, the auction unit will request to carry out procedures to adjust the price down. However, because there are still people submitting documents and some lots are successfully auctioned, the service units continue to bid instead of adjusting the price.

On the side of the property owner, the representative of the Nghi Loc District Finance Department said: Unless the land price cools down significantly and there are no buyers in the auctions, the locality will propose a plan to adjust the price down. Although the starting price is currently quite high and if the auction is not successful, it will affect the budget collection plan, but the localities are reluctant to adjust the starting price because the market is quite erratic and unpredictable.

An apartment building with many apartments next to Vinh Tan Street (Vinh City) extension. Compared to a few years ago, because there are not many apartment products in the inner city, the price has increased compared to before. Photo: Nguyen Hai

In some other aspects, according to some transient investors, although the State affirms that it is not unreasonably tightening capital investment in real estate, in reality, to ensure credit safety, banks are strictly controlling loans.invest in real estateIf any locality shows signs of abnormally hot growth in capital mobilization for real estate, the State Bank and higher-level commercial banks will warn and control more closely to reduce the risk of bad debt.

Waiting for new momentum

Currently, it is clear that the real estate market is moving sideways because the Government and ministries, branches and localities are directing the calculation of taxes and fees for land use rights transfer closer to the actual transactions in the market, instead of basing on the agreement in the contract. Not only that, in the near future, the Government will increase the efficiency of land and property use by imposing high taxes and fees on those who own 3 or more properties, causing concern for real estate investors.

Mr. Nguyen Ngoc Minh - Director of Nghe An Property Auction Service Center shared: Although land auction is only one channel, the supply to the real estate market, it is a reference channel that affects real estate prices in general. If the auction land price increases, it means that the land prices of the remaining segments will warm up and vice versa.

The infrastructure of the land auction area in Trung Thanh hamlet, Hung Dong commune, was quite active in early 2022, with some land plots increasing by nearly one and a half times, but now the heat has cooled down, making it difficult for investors to resell. Photo: Nguyen Hai

According to Mr. Minh, with the current mechanism and land being an investment and business channel, it is very difficult for people with average income and real demand to access and buy land at the starting price set by the State. Up to now, whether it is bustling or quiet, most of the participants and winning bidders are "regular customers" at auctions. Recently, when prices are quiet, investors are quite cautious, but it is also an opportunity for people with capital and real demand for land to access and buy land. However, investing at this time is also difficult because price trends are very unpredictable.

Investors and land traders survey the location of land lots before the auction in Tang Thanh commune (Yen Thanh). Photo: Van Truong.

To limit the situation of bidding at high prices and then abandoning the deposit, Mr. Nguyen Phan Khoi - Deputy Head of the Finance and Planning Department of Nghi Loc district said: Because the Provincial People's Committee stipulates that in rural areas, auction participants only need to pay a minimum of 10% of the land lot value, while the land price in rural areas is quite low, causing the situation of abandoning the deposit after the auction to increase compared to before.

In addition, according to the Property Auction Service Center, due to the regulation of the time limit for paying financial obligations after the auction is quite long (90 days), except for cases of depositing 50% of the land value 30 days after the auction, even if the auction is successful, investors can still withdraw their deposit after 60 days. In case73 bidders abandoned their deposits in Dien Chau districtIn many areas, due to failure to pay money after the auction as prescribed, the District People's Committee decided to cancel the auction results and withdraw 15.7 billion VND in deposits to the budget, which is an example. Because of the above shortcomings, many districts are proposing that the province amend the regulations to increase the percentage of deposit value in rural areas and shorten the time to fulfill financial obligations.

According to Mr. Le Manh Hien - Vice Chairman of Dien Chau District People's Committee, in recent years, the district has invested in infrastructure for many land plots to auction to exploit land funds, but due to the virtual increase in land prices, the situation of deposit abandonment still occurs frequently. In the photo: The auctioned land plot in Dien Phuc commune (Dien Chau) has invested in quite nice infrastructure but still had deposits abandoned after the auction in mid-2022. Photo: Van Truong

In the context of the auction land segment in particular as well as the land division and sale transactions in residential areas being quite quiet, the land segment for subdivision and sale innew urban areasin Nghe An is quite rich and waiting for new momentum. Along with Vinh city and towns with high-end real estate projects or new urban areas with abundant supply, many localities are accelerating to accelerate the urbanization process, so there are also many products launched on the market. Leading this trend is Dien Chau district with 2 large projects in Dien Thanh, Dien Ngoc, Dien Ky communes; Do Luong has 2 projects in Lac Son, Yen Son communes and is continuing to call for investment in new urban area projects.

Infrastructure of the land auction area next to Mu Ba culvert area and near the Dau Bridge New Urban Area Project, Trang Son commune (Do Luong). Photo: Nguyen Hai

Similarly, Tan Ky district has recently approved the planning of the regions and approved the investment policy for two new urban areas in the South and North of Tan Ky town with hundreds of plots of land to be put on the market; Quynh Luu district has planned and built infrastructure to form two new urban areas in Quynh Hung - Quynh Ba and Quynh Bang - Quynh Nghia with about 300 plots of land to be put on the market, which is expected to be a new choice for investors.