Unprecedented land fever in the US and record-high prices in Vietnam
In Vietnam, 2021 was a year of land fever.
A shabby home in Colorado was offered for sale for nearly $600,000. The sellers saw it as a test because they thought no one would buy it, but surprisingly many people inquired about it, including those willing to pay in cash.
Real estate fever has been happening in the US. Houses are selling at an unprecedented rate. Ugly and dilapidated houses sell very quickly at prices much higher than the original owner’s price.
“This has been a crazy year,” said Matt Holm, a real estate agent with Compass in Austin. In January, he put up for sale a house that had been used for 5 years, priced at $425,000. He received 35 offers and sold it for $545,000, 30% more than the list price.
He cited another case. A customer bought a lakeside villa for 6 million USD in 2020. In June, the house sold for 9 million USD. Two months later, the price increased to 11 million USD.
Jill Carrigan, a real estate agent with The Grubb Company, sold a house in Berkeley, California for $2.3 million, though the owner of the house had asked for $1.15 million.
Housing prices in the US began to climb sharply last summer when the rules against the Covid-19 pandemic began to be relaxed in this country. After spending more time at home, many Americans wanted larger housing. In addition, some who continue to work from home moved out of urban areas with expensive living costs.
According to the Federal Housing Finance Agency (FHFA), in the third quarter of 2021, the average house price in the US increased by nearly 20% compared to the same period last year. This is the highest annual house price increase in the history of the FHFA home price index.
Housing prices in Vietnam hit a record
In Vietnam, 2021 was also a year of land fever. Land prices in the area around Vung Ang Economic Zone in the central province of Ha Tinh are increasing sharply. The prices of many plots of land doubled after a few months. Investors from many provinces have flocked to Vung Ang to buy land.
Local people told VietNamNet that land prices had doubled since early 2021. Recently, the media reported that a plot of land was auctioned in Dong Ha city in Tri province for 4.5 billion VND, while the starting price was only 1.8 billion VND.
Land prices in many other places across the country also skyrocketed. However, possibly the most expensive land in Vietnam was in Thu Thiem, in HCM City.
A HCM City-based company paid more than VND2.4 billion for a square meter of land in Thu Thiem. This firm offered VND24.5 trillion for a land plot of 10,060sq.m. during an auction held in December.
At this price, land in the downtown area of Ho Chi Minh City is already as high as areas with the most expensive real estate prices in the world such as Tokyo and Hong Kong.
According to a survey, 1 million USD can buy 16m2 of land in Monaco, 22m2 in Hong Kong, 54m2 in Shanghai, 58m2 in Los Angeles and 66m2 Beijing. In Vietnam, 1 million USD can buy about 10m2.
Mr. Nguyen Quoc Anh, a real estate expert, said that cheap money is still flowing into the market because deposit interest rates are very low, and the risk of inflation is high.
People still tend to choose real estate as a safe investment channel. And loan interest rates are currently at preferential rates. In 12 months, the home loan interest rate was only 6.69%, a sharp drop from 8.79% in 2020. This also contributed to encouraging cash flow into the market.
After many northern provinces and cities took action to deal with land speculation, many provinces in the south and central region such as Quang Ngai, Ba Ria – Vung Tau, Khanh Hoa, Dong Naivdid the same.
Real estate expert Le Xuan Nghia said there is an ironic situation: those who have land and land speculators “push” prices to the sky, then buyers are afraid, so in the end there are not many transactions.
“The price is too high as it is ‘blown’ up, so supply and demand are difficult to meet. There are signs of a real estate bubble in the future,” Nghia said.