Concerns over rampant speculation are rising as land prices in many suburban areas across Vietnam have climbed twice or thrice, even five times in a year, a senior National Assembly member said.
Nguyen Thi Thanh, a member of the National Assembly Standing Committee, attributed the soaring prices to speculative activities. "The expansion of the speculative real estate market encourages individuals and businesses to speculate using financial leverage," she said.
"The risk of bad debts for commercial banks grows when the market is turbulent," Thanh told a standing committee meeting on Wednesday.
Increased investment in securities and real estate showed weak consumer demand and inefficient expansion of production, she added.
Real estate credit growth has reached 17.14%, higher than the banking system's average credit growth. Outstanding credit for the sector accounted for 20.11% of the entire system's loans, according to the State Bank of Vietnam.
As of March 31, 2022, outstanding credit for the real estate sector surged to VND783,942 billion ($34 billion). Of this, the figure for urban and housing development projects was $8.15 billion, while it was $5.52 billion for house construction and renovation activities, accounting for 24% and 15.4% of total outstanding loans respectively.
Le Thi Nga, Chairwoman of the National Assembly's Judicial Committee, said the market for land use rights has recently shown signs of uncertainty. "The phenomena of land auction irregularities and real estate brokers’ collaboration to inflate land prices have caused land fevers and disrupted the market."
Many plots of land remain unused, resulting in waste, while complaints and denunciations related to land use remained abundant and complicated, Nga added. Land related denunciations accounted for nearly 70% of the total complaints.
The National Assembly's Economic Committee suggested that solutions should be developed to tightly regulate substandard real estate transactions and to precisely determine property prices to avoid tax losses.
Authorities also need to analyze, evaluate, and amend legal regulations to stabilize the market and strengthen investor confidence, the committee said.
"We are prioritizing resources to complete the Land Law amendment by 2023," said Vu Hong Thanh, Chairman of the Economic Committee.