I would recommend an article about the land prices distorted in Vietnam: 
Why has Land-Housing Price Increasingly Risen?
25/03/2008
Along with the rocketing of prices of many other goods and services, recently, the land and housing price has increasingly risen. Although many alternatives aiming at reducing land and housing price have been suggested by ministries and relevant agencies, the land and housing price has continuously increased as a “unruly horse”. What are the main reasons for this situation?
Without any impact from world price
Many people recognized that the continuous increase in or remaining stationary at very high level in prices of gold, petroleum and many other categories of goods and services are impacted by the world market. However, in respect of land and housing market, it is likely that there have been any impacts from the world market. At present, the land and housing price level in international financial centers such as London (UK), New York (USA), Tokyo (Japan), Shanghai (China) remains stationary, while the land and housing price in Vietnam are keeping to rocket, especially in Ha Noi and Hochiminh City. In several months at the end of 2007 only, the land and housing price in these two cities has increased between 50%-100%.
A strange thing which economic analysts both inside and outside country could not explain is that while income of majority of Vietnamese is about $ 700 per year, and $ 1,000-1,500 for people in Hanoi and Hochiminh City (for people of Shanghai, London, New York... the figure is between $ 10,000-40,000),
the price of one square meter of land in Hang Dao Street or Hang Ngang Street in Hanoi and in Dong Khoi street and Le Loi Street in Hochiminh City is of VND between 800,000 million and 1 billion (equal to $ 50,000-65,000); It means that the amount of money to buy one square meter of land would be enough to buy an average flat in Shanghai, London or New York.
In general, the land and housing price in Vietnam is 1.5 time higher than that of many countries over the world. therefore, it could not say that the highly increase in land and housing price in Vietnam was caused by impacts of the world market; and if any, it would be a little increasing impact on prices of some categories of input materials such metal, cement and construction costs. However, it is certain that the level of such a increase in expenditures could not push up the land and housing price to the high level as today. So what are the main reasons making the land and housing price in Vietnam unilaterally increasing like this?
Is it possible being a mechanism mistake?
According to the many economic analysis’s, the reason for land and housing price as high as today is the imbalance in demand – supply. With a country of 80 million population, the fast natural increase in population, specially in two big cities of Hanoi and Hochiminh, has led a situation in which the housing capacity could not meet the demand for living. In addition, the number of newly established enterprises in the whole country has increased day by day leading the high demand for land renting and land using. This is an important reason for increasing in land and housing price. However, it is not main one.
Come back the issue of supply being not enough for demand causing the high increase in land and housing price as well as the reason of the natural increase in population as analyzed by some policy makers and economic experts. The question is that whether these explanations are reasonable or not? The answer is not. Why? The only need is to put the issue in the international context during the integration time one would have the answer. We may look at our neighbor country - China to interpret this issue.
Developing market economy with a level of GDP higher than that of Vietnam, but land and housing price in China is cheaper than that of our country (remember that China joined WTO before Vietnam). In respect of the natural increase in population, in huge cities such as Beijing, Shanghai, Shandou... the population has increased much more than in Hanoi and Hochiminh City. However, land and housing price in these cities is equal 70% that in Hanoi and Hochiminh City. So what are the reasons for dramatically increasing in land and housing price in Hanoi and Hochiminh City. According to many economic experts, there would be problems in managerial mechanism and policy making.
Let remember the situation during 17-18 years ago, (except the 1982-1985 period when prices increased with the speed of a flying horse creating high inflation) when the relationship between price-income and salaries of majority of people was harmonized, land and housing price almost had not suddenly fluctuated. The rich usually accumulated gold for purpose of earning profit, land was not considered as a category of high value property. Depending on income level (real income), people could effort any lot of land they really wanted.
Since our economy transformed from the central planning mechanism into market one, land has become a category of property with value higher and higher – a category of profitable property. The land and housing market has become “warmer and warmer” up to “fevered” (the first time of “fevered” land and housing price was the 1992-1994 period). When land and housing price gets “fever”, income of majority has not yet increased or increased with a low speed not correspondent to the increase in the land and housing price. While Government was not finding out feasible solutions to curb the increase in land and housing price, the relation between land and housing price and income developed by an inverse proportion. The increases in salary, income and land and housing were one time, two times and three-four times, respectively. There have been an appearance of groups with different benefits in the society. Some people having money and power have quickly grown rich by abusing the loosing in state management during transforming from the central planning mechanism into market one. Many people having money by corruption and receiving bribe have shifted to doing business in land and housing sector making land and housing being a category of properties with the highest value. During this period, state management agencies and policy makers should have timely intervene solutions so that the land and housing price properly could reflect their real value and were accommodated to the income of majority. However, we could not do like this. The land and housing price have increased at a gallop since then. Recently, the relationship in increasing in salary, income and land and housing price is 1-2-100, respectively, compared to the increase in land and housing price for the first time of 1-2-3 or 4 as mentioned above. The current average GDP per capita of Vietnam is $ 700, while the land and housing price is VND 30 million (about $ 2,000) per square meter. A reality could not be imaged.
Meanwhile, Land Law (supplemented), a law considered as the most advantage law in this sector, encompasses some provisions which are contributing to make the land and housing price more increasing. They are provisions on which Provincial/City People’s Committees will be entitled, depending on the current price, to adjust the land and housing price for one time every year. As a result, the market price of land and housing has been increased every year. In addition, the cooperation between related state management agencies, specially Ministry of Finance, Ministry of Planning and Investment and State Bank, is too weak and inefficient. Each ministry has tried to “curb” the increase in land and housing price by its own policies in an almost unilateral manner without any cooperation with each others in policies on interest rates, exchange rates and prices applicable. On this aspect the role of these agencies is too little important so that the investors could self-determine land and housing price as the market price. Finally, these agencies themselves have used this market price as a standard price for their management work. More further, it could not forgive to mention a “evil alliance” between part of Government officials working in public agencies degraded in both ethics and integrity and land speculators to illegally earring benefits and pushing the land and housing price much highly. On a deeper aspect, the increase in land and housing price has indicated that there have been an appearance of many people who have not earned living by salaries or legal incomes but by suspicious methods in order to quickly grow rich.
The continuous increase in land and housing price in many past years looks like a “disease” which has been negligently treated by “doctors”, who are state management agencies; reasons for the “disease” have not yet been detected to be decisively treated. It is about time to have a “major operation” to treat the “disease”. It would be very difficult and must be pain. However, no gain without pain. The question is that, at the moment, whether we dare to do or not?
General Department Of Taxation - Ministry Of Finance - Chi ti
