Revised Land Price Table in Ho Chi Minh City: A Balanced Solution or Still Not "Fairly Aligned" with the Market?

In recent years, the issue of land price tables in Ho Chi Minh City has become a topic of profound controversy and complexity. The newly issued Decision No. 79/2024, which involves adjustments to the land price table, is considered a step that aligns with the current economic and social context. However, this land price table still does not genuinely reflect the actual market prices, leading to a variety of opinions from the public and experts. Determining land prices is a complex equation, requiring a balance between multiple factors such as economic impacts, social effects, and sustainable urban development.

Bui Xuan Cuong, Vice Chairman of the Ho Chi Minh City People's Committee, stated that this land price adjustment aims to reduce negative impacts on residents and businesses. The new prices are 20-25% lower than the July draft but simultaneously 4 to 38 times higher than those in Decision No. 02 previously issued. This shows a significant change in how land value is assessed, aiming to gradually align more closely with market realities. Nevertheless, according to surveys by various research agencies, the new land price table still lags behind actual market transaction prices by 25-50%. For instance, on Nguyen Hue Street (District 1), the adjusted land price is 687 million VND per square meter, while market prices are recorded at between 1.2 to 2 billion VND per square meter. This substantial gap reveals a notable inconsistency between government-regulated land prices and the market value that investors actually face.

Balancing Interests and Enhancing Market Transparency

The adjustment of the land price table is viewed as a transitional step in the process of establishing a land price table compliant with the 2024 Land Law, with the goal of achieving a "fairly aligned market" by 2026. However, at present, this land price table still fails to fully reflect the actual value of real estate in Ho Chi Minh City's complex socio-economic context. Major streets like Dong Khoi, Tran Nao, and Nguyen Hue still exhibit significant discrepancies between adjusted prices and market values, presenting challenges for both management authorities and investors.

Setting land prices below actual value aims to mitigate financial burdens on residents and businesses, especially in economically challenging times. However, this also exacerbates the lack of transparency in real estate transactions. When land prices fail to reflect market value, the transfer and sale of land inherently carry many risks, and may even lead to underground transactions, thereby compromising market stability and transparency. These unpublicized or underground transactions continue to widen the gap between actual land value and official values, creating a complex cycle in the development of the market.

Impact on Residents and Businesses

According to the Ho Chi Minh City Department of Natural Resources and Environment, the construction of the revised land price table was based on data from over 96,000 successful transactions and 133 land compensation approval decisions. These data points are crucial in ensuring that the new land price table reflects part of the real situation. However, the current adjusted land prices only reach about 70% of the market value, leading to difficulties in balancing the interests of residents, businesses, and the government. This price table affects not only the taxes and fees that residents and businesses must pay but also directly influences the compensation costs for land acquisition for public projects.

In Thu Duc area, for example, the new land price in the revised table is 120 million VND per square meter on Tran Nao Street, which is significantly lower than the actual market price of 180-250 million VND per square meter. This results in unfairness in land compensation, making those whose land is acquired feel that they are suffering losses because the compensation does not reflect the real value of their property. Low compensation prices not only cause economic difficulties but may also lead to prolonged disputes, affecting the progress of infrastructure and residential development projects. This is a serious issue that requires timely and continuous adjustments from managing authorities to ensure fairness and effectiveness.

Moreover, this discrepancy also poses challenges for real estate enterprises. With prices lower than the market, enterprises face instability in asset valuation and investment cost calculations. This can dampen investment incentives and cause businesses to hesitate in participating in Ho Chi Minh City's market, especially for large-scale projects requiring significant capital and long-term implementation.

Future Directions

Nguyen Toan Thang, Director of the Ho Chi Minh City Department of Natural Resources and Environment, stated that the adjustment of the land price table will bring many positive impacts, especially in enhancing the transparency of the real estate market and disclosing taxes and fees. Transparency in land value can help limit tax evasion or reduce unreasonable tax liabilities, while also increasing local budget revenues. In addition, the enforcement of penalties for violations of land regulations will be strengthened to ensure a healthy real estate market, and to provide the necessary deterrence against such violations.

However, the question remains whether this revised land price table will truly make the market "fairer," as the land prices in the table still lag considerably behind actual transaction values. To achieve the goal of creating a transparent and equitable market, Ho Chi Minh City needs to continue improving and adjusting the land price table so that it better reflects the real value of land, thereby avoiding the market being influenced by informal factors. This will require coordinated efforts between government management agencies, enterprises, and the community of residents to build a transparent, efficient, and sustainable real estate market.

The city's goal is to ensure fairness and protect the rights of residents, while also considering how to make the land price table reflect actual value to lay the foundation for a sustainable and transparent real estate market. In the future, an applicable land price table will not only contribute to the development of the real estate market but also promote urbanization and socio-economic development of the city. To achieve this, Ho Chi Minh City needs to continue conducting in-depth research, gathering detailed data, and listening to feedback from all stakeholders to ensure that every adjustment decision is scientifically based and suitable for the actual market situation.

Additionally, training and capacity building for officials involved in land valuation is also an important factor in improving the quality of the land price table. When the staff has a high level of expertise and a thorough understanding of the market, the process of adjusting land prices will become more accurate and appropriate, thereby helping to ensure fairness and transparency in all activities related to land. This is a key element for Ho Chi Minh City to move towards building a real estate market that is not only fair but also sustainable and effective in the long term.