Big Data & AI Application in Construction and Exploiting National Database of Real Estate Prices in Vietnam

Big Data & AI Application in Construction and Exploiting National Database of Real Estate Prices in Vietnam – Part 2: Solutions

The application of big data (big data) and artificial intelligence (AI) in the field of real estate (RE) is a common trend of countries around the world. A synchronous national database system of real estate information along with the effective exploitation by technology applications is extremely necessary for policy making as well as in research and business. In part 2 of this article, the authors would like to present the process to build this system in Vietnam and how to exploit data sources for different purposes.

Agency implementing national database on real estate prices in Vietnam

Real estate price data consists of two main components, ‘price’ and ‘real estate’. In which, the ‘price’ element is understood as the ‘professional’ element while the ‘real estate’ element is the ‘subject’ element. In Vietnam, the ‘price’ operation is directly managed by the Ministry of Finance through the Price Management Department; the ‘land’ subject is directly managed by the Ministry of Natural Resources and Environment; the ‘construction attached to land’ (or ‘house’) subject is directly managed by the Ministry of Construction. In addition, the construction of infrastructure for the database needs the support of the Ministry of Information and Communications.

Therefore, the authors propose that the Ministry of Finance, the Ministry of Natural Resources and Environment, the Ministry of Construction, and the Ministry of Information and Communications are state management agencies that will participate in the development of a national database regarding the real estate prices.

Main responsible agency

Currently, the Ministry of Construction has been assigned by the Government in terms of the task of building, managing and using an information system on housing and the real estate market (according to Decree No. 117/2015/ND-CP). Although this information system includes real estate prices, the source of the price database is being limited. In this system, one of the important sources of information related to real estate prices comes from investors (real estate developers) for real estate listed as apartments, commercial apartments. This is also considered a data source to integrate with the national database of real estate prices mentioned below.

Afterwards, the Ministry of Natural Resources and Environment actively implemented the land database (according to Circular No. 75/2015/TT-BTNMT). Similar to that of the housing and real estate market information system, the source of the price database has been a matter of concern. In this basis, one of the important sources of information on real estate prices will come from organizations with land valuation functions upon complying with Circular No. 36/2014/TT-BTNMT detailing land valuation methods; building and adjusting land price list; specific land valuation and land price determination consultancy and Circular No. 33/2017/TT-BTNMT amending a number of articles of Circular No. 36/2014/TT-BTNMT. This is also considered a second data source to integrate with the national database on real estate prices mentioned below (however, the information provided from this facility is mostly for the fulfillment of the State’s financial obligations towards land).

In 2021, the Government issued Decree No. 12/2021/ND-CP (amending and supplementing a number of articles of Decree No. 89/2013/ND-CP), in which, Article 12b is supplemented with the content which is to assign the Ministry of Finance to be responsible for building, managing and operating the national database on prices (in general).

As a result, although each Ministry is directly in charge of a database/information system, these units focus on subject specifications rather than price data. Particularly, the Ministry of Finance is the unit assigned to build the price database in general.

Therefore, the authors propose the Ministry of Finance to be the agency responsible for building a national database on real estate prices; The Ministry of Construction and the Ministry of Natural Resources and Environment to play the role of connecting the database of the subject’s specifications to the national database of real estate prices. The Ministry of Information and Communications is responsible for developing technical regulations for the national database system on prices.

The agency responsible for building the infrastructure for price data storage

The Ministry of Natural Resources and Environment, with its roles and strengths of expertise available, should be tasked with building the infrastructure for storing price data.

Some of the input properties of the database contain information other than the price and characteristics of the property listed as behavior, tastes, income and gender of the property owner. Therefore, the Ministry of Natural Resources and Environment needs to: (i) develop a real estate coding system as well as (ii) divide different access rights for different objects to the same property. Examples of access permissions and levels of access are as follows: (i) only the average price of the route can be accessed, (ii) the price of each asset can be accessed but not the address and attributes of the asset route; (iii) access to the asset's price and attributes but does not display the asset's address; (iv) access to the property’s price, properties and address but does not display information relating to the property owner; and (v) access to all information. This will ensure the safety and security of the data so that the data is not misused.

AI application for the quality assurance of the data source

Regulatory agencies can apply AI to detect input data with excessive (high/low) price spikes compared to the general level of the same road segment on the same route. This will make it easier for the regulator to notice/mark/recognize properties with a particular price or to know the special features that make the price difference of that asset compared to the general market level.

Proposing the process of building a national database on real estate prices in Vietnam

Land database

The Ministry of Natural Resources and Environment is responsible for building a land database including spatial land data, land attribute data and other data related to the land parcel.

Database in terms of housing and real estate market

On the basis of the land database, the Ministry of Construction will update the database on housing and real estate market, including legal documents systems; housing and real estate development planning programs besides other relevant detailed data.

National database regarding real estate prices

Consequently, all data on properties of real estate will become available, and there will be coordination among relevant Ministries/Departments/Units (see Figure 5 for details). On this platform, the Ministry of Finance will update price data through two channels:

Firstly, through the channel of updating data from the Department of Price Management through two groups of units: (i) the National Price Data Center; and (ii) organizations with the function of price appraisal. To do this, both the center and the appraisal organization must be granted access to the system to update the data.
Second, through the channel to update data from the General Department of Taxation on personal income tax declaration from real estate business.

During this management time, the system needs to separate the updated price data from the Department of Price Management and the General Department of Taxation because there will be a difference because of the low declaration value to reduce the tax payable. In the long term, the updated data from the Price Management Department is a channel for the General Department of Taxation to compare and to adjust the tax declaration behavior of individuals dealing in real estate. Only then, will the updated data from these two channels approach and reflect the market price.

Therefore, the national database on real estate prices has four independent data systems as follows: (i) the land database of the Ministry of Natural Resources and Environment; (ii) the housing and real estate market database of the Ministry of Construction; (iii) Market price database of the Price Management Department - Ministry of Finance; and (iv) the declared price database of the General Department of Taxation – Ministry of Finance. Therefore, in order for these four systems to be able to connect with each other, from the very beginning, the Ministry of Information and Communications needs to coordinate with the above units to develop technical regulations, in which the focus is on establishing codes identifier for each parcel of land – the minimum identifier for updating price data.

In parallel, in the update process, AI needs to be applied to filter data in order to avoid duplication and noisy information.

Exploiting the national database on real estate prices in Vietnam

In accordance with the built database, the State management agency can exploit in the following directions:

Building real estate price index;
Developing housing policies;
Managing personal income tax in real estate business;
Looking up real estate planning;
Brokering virtual real estate for online customers;
Being reference channel for banks in granting credit;
Commercializing the national database on real estate prices.

Please refer to the full article “Big Data & AI Application in Construction and Exploiting National Database of Real Estate Prices in Vietnam – Part 2: Solutions” here. Author group: Dr. Nguyễn Quỳnh Hoa; MSc. Huỳnh Kiều Tiên; Dr. Hay Sinh; MSc. Trần Bích Vân; MSc. Nguyễn Kim Đức; MSc. Nguyễn Thị Tuyết Nhung, Faculty of Economics, UEH School of Economics, Law and Government.

This article is in series of Spreading researches and knowledge from UEH with “Research Contribution For All – Nghiên Cứu Vì Cộng Đồng” message, UEH would like to invite dear readers to look forward to Newsletter ECONOMY NO. # 43 “Real Estate Bonds – One Chinese Case Study And Policy Implications For Vietnam – Part 1: The Case From China”

News, photos: Author group, UEH Department of Marketing – Communication