Property market recovers but price fever unlikely
Property market recovers but price fever unlikely
The property market performed impressively in the first quarter of this year, with figures showing that recovery returned after a long freeze.
However, a price fever or "market bubble" is not expected to occur due to several sources of supply, and because both buyers and property developers have become more cautious after the 2007-08 bust.
The real estate market started warming up last year. In the first quarter of this year, the recovery of the market was reflected in the rising number of successful transactions, property start-ups and falling inventory, together with easier credit.
The construction ministry's statistics showed that the number of transactions in March and in the first quarter of this year rose a whopping three times year-on-year.
The property inventory, as of March 20, fell by nearly VND58 trillion (US$2.74 billion), compared to a year ago, to VND70.7 trillion ($3.34 billion). Outstanding loans as of the end of January rose by 4.8 per cent over the end of last year to reach VND316.578 trillion ($14.98 billion).
The number of property start-ups in the first quarter of this year also increased by 50 per cent year-on-year, showing improved confidence and expectations for profits, the Agency for Business Registration said. The property sector also ranked second in attracting foreign direct investment (FDI), with $202.93 million being poured into the sector, accounting for 11 per cent of the country's total FDI.
The government is speeding up the disbursement of the VND30-trillion ($1.4 billion) credit package for the property market. The construction ministry said as of February 25, about 20 per cent of the package had been disbursed.
Although there was worry that market fever, as during the 2007-08 period, might occur, given strong capital inflows due to the return of speculators, several experts were optimistic about the realty market's recovery and expected breakthroughs to occur in the following quarters.
Director of An Gia Real Estate Investment and Development Company Nguyen Trung Tin said the market was recovering, but was not in a fever. The housing supply was moving to meet customers' demands and buyers had several choices, while developers were seeking stable and long-term growth, he said.
According to Director of Hung Thinh Land Nguyen Nam Hien, the scars of the 2007-08 crisis would make both home-buyers and property investors more cautious in transactions, which would contribute to stabilising the market.
Sharing the same viewpoint, Deputy President of the HCM City Real Estate Association Nguyen Van Duc said the prices of several projects increased recently, but this was not evidence of speculation as those were good projects that fit buyers' demands.
The market would gradually warm up this year, but recovery did not mean that all projects would have a large number of successful transactions, experts said, adding apartments with average prices of about VND1 billion ($47,300) per unit would dominate the market.
In addition, the regulation that allows foreigners to own houses in the country will help boost transactions in the medium and high-end segments.
