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"Quantitative real estate market": The two values

Post time: 15/10/2013

The study by Dr. Nguyen Tan Vang that Dianam Real Estate Forum (DNRE) transferred to you readers have raised specific numbers are affirming an illogical reality of Vietnam Real Estate Market says general and HCM City in particular: real estate prices are too high compared with income! Raised this issue, the study authors do not necessarily just want irrationality confirmed, non-logic of real estate prices, but also wants more emphasis on forecasting the possibility of the fourth "craze" with Vietnam real estate!

However , until now , the fourth fever has not occurred at Ho Chi Minh City. Of course, in 2008, the author could hardly predictable bout of depression affect the world economy that many economists called " global financial crisis in 2008 ." The 2008 crisis originated from the loaning out of control in the field of real estate in the United States (lending in the subprime mortgage market) of the Investment banking system ( unlike commercial banks in Vietnam ) . The crisis has not only affected the real estate sector but also cause vibration financial markets the U.S. and many other countries around the world . " Aftershocks " of the crisis in 2008 has affected a number of European countries in 2010 and even today.

In his research , Dr. Nguyen Tan Vang gave the figures related to the value of a home and the home is considered real estate product represents - tied to the needs of the people . However , studies in thematic series " Vietnam Real Estate - looking back 20 years," has showed us that real estate prices in the fever of the cost related to " land use rights " not just for the " land assets . "

In the calculations of Dr. Nguyen Tan Vang , the price of " land use " and " property on the ground " nearly equal at 2008 in Tan Phu District, Ho Chi Minh City, but when compared to the present time , the prices of certain " land use rights " have higher rates of "property on the ground " and about 200 % . Construction unit prices not higher than the current 8 million m2 and prices that can fully develop the high-quality private house or even a condominium m2 average unit price is only built reach up about it.

Currently, the price of " land use rights " in Tan Phu District has on average 200 % compared to 2008 , the house was like in the analysis of the study was approximately 50 % higher price and thus more far more likely to purchase from people in need . In the central business district or developed more than in Ho Chi Minh City , the price of " land use " and many times higher than the value of " assets on the ground " has become a " secondary parameters " for the house .

As the price of real estate in Hanoi , the value " property on the land ," much less significant than the value of " land use rights ". Currently, the price of land in new areas infrastructure development such as Dich Vong up to 300 triệu/m2, so with one house with area is 100m2 was built three-storey, which the price of " land use " and the price is 30 billion; "land assets" valuable is about 2.4 billion . It is a celebration for us single ratio of two values above for a house in Hanoi . With the analysis in 2008 , Dr. Nguyen Tan Vang criticized Ho Chi Minh City Real Estate Market is " a real estate market completely unfair ", so now we should evaluate Hanoi Real Estate Market in like?

Through the above analysis , we see property prices increase mainly due to the increase in prices of " land use rights ". Price of " land use rights " to increase due to the development of regional infrastructure to facilitate increased traffic as well as other gadgets in your life and the increasing population of the area led to increased or lease of property used in business purposes .

Research process of the real estate project to define " cost " of that land price per m2 of land in the new urban areas will include agricultural land compensation rates , conversion rates use from agricultural to urban land and make infrastructure cost for new urban areas . Total provisional values above considered " cost " per m2 of new urban land and is the basis for all investment decisions sale prices ( often referred to as historical cost ) . However, when the project was put on the market , resale prices ( often referred to as market prices ) immediately increased , even increasing rapidly. Currently , the market price in the new urban area in Hanoi was up from 200 % to 600 % , and the land of the " old city " - that is, the area has been put to use and has the advantage for transportation , trade , the price level rose in Hanoi can be calculated to thousands % .

Speaking of " market value " is the price of " land use " has increased to thousands % did not surprise us : let the market supply and demand decisions . But in all the 4 Thematic " Vietnam Real Estate - looking back 20 years," we have put into question the contradictory evolution of Vietnam Real Estate Market from 2008 to date in North and south and by trying to explain the current financial analysis but we have not entirely different question :

Why the strong demand in Hanoi to house prices , land in Hanoi continues to rise while in Ho Chi Minh City still falling and house prices, the current land back to Hanoi three times the price of housing in the Ho Chi Minh city?

According to the principles of the market , demand for real estate in an area proportional to the level of infrastructure development , employment and ability to earn income from employment in that region . All three of the above factors will determine the level of investment in the region , or in other words - is the main financial flows . On this view, Ho Chi Minh City totally inferior Hanoi can say is even more powerful in some ways .

So financial flows did not comply with market rules reasonable?

We will work together to find answers to two questions on this in later articles of this Symposium .

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