Draft adjustment of land prices in HCMC: Rising prices, growing concerns

As reported by SGGP Newspaper on July 27, the Ho Chi Minh City Department of Natural Resources and Environment is seeking feedback on a draft decision to amend Decision 02/2020/QD-UBND dated January 16, 2020, regarding the land price list in the city. The new land price list is expected to increase prices by up to 37 times compared to the current rates. This significant increase has immediately shocked many residents.

Based on market principles

This is the explanation from the HCMC Department of Natural Resources and Environment regarding the draft of the new land price list. In accordance with the Land Law 2024, the Department has developed a new land price list based on market principles and market prices. This proposed land price list will be applied in 12 cases and impact 12 corresponding groups.

Among these groups, one will benefit, specifically those who receive compensation from the State when their land is reclaimed; three groups will not be affected; and eight groups will be affected, primarily those who change the land-use purpose to residential land, and those who have to pay land-use taxes.

According to this price list, the highest urban land price in HCMC will be VND810 million per square meter on central streets such as Dong Khoi, Nguyen Hue, and Le Loi (District 1). Compared to the current land price list, this proposed price is five times higher. Some adjacent streets to Ton Duc Thang Street (from Me Linh Square to Nguyen Tat Thanh Bridge) will be VND528 million per square meter, an increase of VND422.4 million per square meter compared to the current price list; Pham Hong Thai Street will be VND418 million per square meter, an increase of VND334.4 million per square meter.

In District 3, the highest new land prices will be on Nam Ky Khoi Nghia, Tran Cao Van, and Cong Truong Quoc Te streets, at around VND420 million per square meter, a 6.5-fold increase from the current rates. Other bustling commercial streets in the area, such as Vo Van Tan, Nguyen Dinh Chieu, Cao Thang, and Pasteur, will see new prices ranging from VND300-330 million per square meter, increasing 5-6 times.

Thu Duc City will also see significant changes in the new land price list. The current average land prices in this area range from VND5-8 million per square meter. However, central streets like Tran Nao and Luong Dinh Cua, currently priced at VND5-13 million per square meter, will see a projected increase of 10-17.5 times, reaching up to VND149 million per square meter.

In Thao Dien Ward, the projected land prices will rise to VND88-120 million per square meter, compared to the previous VND7.8 million per square meter. Notably, Hoc Mon District will experience drastic increases in some areas, such as Bui Van Ngu Street (from Bau T-junction to Nguyen Anh Thu Street), where land prices will rise from VND1 million per square meter to VND36 million per square meter, a 36-fold increase. Nguyen Thi Thang Street will see prices rise from VND610,000 per square meter to VND22.4 million per square meter, a 37.3-fold increase.

Many impacts predicted

Many residents express concerns about the proposed increase in land prices compared to the old rates. Dang Nguyen Quynh Truc, a resident of Cu Chi District (HCMC), explained that market land prices fluctuate daily, even hourly. At times, there are artificial booms where property prices skyrocket, only to later plummet back to much lower levels.

“Therefore, in my opinion, updating land prices to follow market prices closely like this is still inaccurate. Moreover, with such a sudden increase in the land price list, many people who have not yet paid land-use fees and cannot obtain land deeds (due to unresolved zoning issues from many years ago) will face difficulties when paying taxes according to the new land prices,” Truc expressed her concerns.

Truc also shared that her parents gave her 500 square meters of agricultural land in Hoa Phu Commune (Cu Chi District), which is zoned for residential use. However, due to financial constraints, she has not been able to complete the procedures to convert it to residential land over the past few years. Now, with the proposed new land price list, the taxes she has to pay will be significantly higher. At this rate, she does not know when she will be able to change the land-use purpose for her plot.

Vo Hong Thang, Investment Director at DKRA Group, stated that from a market perspective, the proposed new land price list in HCMC will impact real estate prices. The costs for land clearance and compensation will increase, along with land-use fees and other associated costs, all of which will be reflected in the project's price.

However, looking at the positive side, implementing a new land price list that closely aligns with market prices will facilitate and speed up the negotiation process for land clearance compensation for real estate and public investment projects, such as transportation infrastructure and social amenities. Shortening the compensation time will also help reduce project implementation costs.

Meanwhile, real estate expert Tran Khanh Quang believes that the proposed price list is somewhat subjective because land prices in some districts are simply multiplied by a coefficient of the current price list (District 1 with a coefficient of 5, and District 4 with a coefficient of 11.3), which still does not accurately reflect the reality of each street.

Lawyer Tran Minh Hung, Head of the Gia Dinh Law Office under the HCMC Bar Association, further explained that property prices are determined by many factors such as the law of value, the law of competition, supply and demand relationships, market trends, as well as the costs of fulfilling financial obligations to the State and other factors.

First, it is important to recognize that increases in the land price list will lead to higher housing prices. This will further reduce the ability of average and low-income individuals to secure housing. Therefore, alongside establishing a land price list that aligns with market values, the government should implement specific policies to support low-income individuals in fulfilling financial obligations related to land prices and purchasing homes.