HANOI: Speculation and manipulation are among factors which have inflated housing prices in major cities recently, in addition to increases in land-related costs and limited supply, according to the Construction Ministry.

The ministry’s statistics showed that in major cities including Hanoi and Ho Chi Minh City, apartment prices continued to increase in the third quarter of this year by around 4% to 6%, or 22% to 25% since the beginning of this year.

There are almost no apartments being supplied with prices below 25 million dong or about US$986 per sq m.

The market only saw the building and sales of apartments with prices from 25 million dong to 50 million dong sq m, with the ones most in demand, priced at 50 million dong or higher.

In Hanoi, the Zurich in Vinhomes Ocean Park in Gia Lam District has a price of around 46 million dong to 55 million dong per sq m.

Elsewhere, the Limi Prestige in Nam Tu Liem District is from 69 million dong, The Ninety Complex in Dong Da District 60 million dong to 75 million dong, The Sapphire-Vinhomes Smart City in Nam Tu Liem District 47 million dong to 67 million dong, and Viha Complex 107 Nguyen Tuan in Thanh Xuan District 75 million dong to 97.2 million dong.

In Ho Chi Minh City, Diamond Centery in Tan Phu District is selling for around 61 million dong to 73.3 million dong per sq m, Stown Tham Luong in District 12 at 29.8 million dong to 43.5 million dong, Urban Green in Thu Duc City 52 million dong to 59.7 million dong, Glory Heights-Vinhomes Grand Park in District 9 at 40 million to 80 million dong, The Aurora Phu My Hung in District 7 and 88 million dong to 90 million dong, and the Beverly Solari-Vinhomes Grand Park in District 9 at 46.83 million dong to 65.6 million dong.

The prices of villas and townhouses in projects with developing infrastructure in Hanoi are also increasing, due to long-term investors, and are priced at around 160 million dong per sq m, or up by 3% for the quarter, and nearly 7% from the beginning of the year.

“Given housing demand, the increasing trend of housing prices is inevitable,” said Le Dinh Chung, general-director of real estate company SGO Homes.

“However, a sharp increase in housing prices over a short period of time is unusual. The main cause for the skyrocketing prices is limited supply and high investment costs, causing investors to have higher expectations for profits.”

Nguyen Hoai An, director of CBRE Hanoi, said this was the first time the Hanoi apartment market had seen such rapid increases in prices over such a short period.

She added that over the past decade apartment prices in Hanoi had increased by an average of 5% per year, but started to increase rapidly from 2022.

According to the chairman of the Vietnam Association of Real Estate Brokers, Nguyen Van Dinh, the recent increases in prices in Hanoi are unusual and unreasonable, especially in the context that the domestic economy, the market and incomes have not recovered.

He said the phenomenon could be due to the impact of so-called “interest groups”.

“Housing prices are skyrocketing but there are few transactions,” Dinh said.

“Speculation and manipulation are inflating housing prices with a shortage of supply to blame. In recent years, the market has not seen any new projects. The housing supply is both in shortage and of poor quality, coupled with an imbalanced housing-product structure.

“It is not a good sign for the real estate market. Unreasonable housing prices will bring many consequences, including rising investment and production costs and undermining competitiveness.”

Economist Dinh The Hien said that there was no market in which buying is” winning”, and questioned why prices kept increasing in a quiet market.

In its most recent report, the Construction Ministry pointed out that the increase in housing prices is partly because of the rising land-related costs, coupled with the impacts of the new land-price framework.

Specifically, land-use rights auctions in some areas saw winning bids many times higher than the initial prices due to weak management, creating room for investors to collude with each other to pay high prices then abandon the deposits after winning the bid with an aim of establishing a virtual price level in the area to make a profit.

This pushes up land and housing price levels, as well as property development costs, meaning that housing supply would fall.

Speculation and manipulation are also inflating housing prices with individual brokers and speculators taking advantage of a lack of understanding among some buyers to make a profit.

The ministry said that these were mostly individuals operating as freelance brokers without official recognition.

They collude to push prices higher than the actual values to manipulate the market, causing damage to buyers and impacting the transparency of the real estate market.

The market also faces a severe shortage of affordable homes for low-income earners in major cities as developers still face difficulties in legal procedures, site clearance, credit access and bond issuance.

 - ANN