Merging provinces raises land prices in some areas, lowers them in others.

The consolidation of administrative boundaries among provinces and cities has stirred public opinion, particularly among real estate investors, with Deputy Director Mr. Le Van Binh of the Department of Land Management commenting on the potential impacts on land prices. Historically, movements of administrative boundaries have influenced real estate prices, with examples like Ha Tay merging into Hanoi causing shifts in investor interest and land values.

Mr. Binh highlighted that the perception of the center of a region, often associated with the location of the People’s Committee headquarters, drives land prices higher due to better infrastructure and investment. With rumors of the merger of multiple communes circulating, there is anticipation of price spikes in areas designated as new centers but a subsequent decrease in areas losing their centrality status. The psychology of the real estate market plays a crucial role in these fluctuations, with investors leveraging information on planning and urban development in merged areas to speculate on land prices for quick gain.

However, Mr. Binh emphasized that these price fluctuations are transient and short-lived, driven by speculative activity rather than sustainable market dynamics. The real estate market is intricately linked to psychological factors, and investors today are less prone to following speculative rumors blindly, preferring concrete planning and development indicators.

Regarding the impact of administrative boundary changes on ongoing real estate projects and land use fees, Mr. Binh noted that existing land price lists are generally stable and segmented by locality-specific zones. Specific price determinations post-merger will be based on these zones, emphasizing the need for clear planning and implementation strategies. The overall effect of administrative boundary changes on real estate prices hinges on various factors such as planning, investment inflows, and development execution, highlighting the complex interplay of elements shaping the market.

As reports indicate a surge in land prices in multiple regions post-merger announcements, local authorities have cautioned against speculative land fever and market manipulation. Provinces like Quang Nam, Thai Binh, Ninh Binh, Tuyen Quang, and Bac Giang have issued warnings and instructed law enforcement agencies to investigate fraudulent and manipulative practices in the real estate sector. The swift intervention of authorities has led to a rapid downturn in the real estate market in many provinces, aiming to curb speculative activities and stabilize land prices.

While the merging of administrative boundaries has triggered temporary price fluctuations and speculative behavior, the long-term impact on the real estate market remains contingent on factors like effective planning, investment, and regulatory oversight. Maintaining stability and transparency in the real estate sector post-merger is crucial to fostering sustainable growth and deterring speculative activities that can destabilize property markets. By emphasizing prudent investment practices and regulatory vigilance, authorities aim to mitigate risks and support a healthy real estate environment in the wake of administrative boundary changes.