Housing market sees price increase, liquidity decrease
Experts have warned that the high rate of inflation will cause the domestic housing market to continuously see prices increase, but liquidity decrease.
According to real estate consultant Le Quoc Kien, the market from the middle of last year until now has seen low transactions as the land and housing prices have increased by 20-25 per cent in the urban areas and 30 per cent in the suburban areas. Meanwhile, the price has surged by 50 per cent in the neighbouring provinces.
Therefore, he predicts that investors who do not face the pressure of bank debt will not sell real estate in the next 6-12 months because they will have to look for other assets. They do not want to keep cash in a period of high inflation. Meanwhile, investors who suffer pressure from banking loans will be forced to sell property when inflation is high.
According to the General Statistics Office, core inflation in April 2022 increased by 0.44 per cent in the month and 1.47 per cent over the year. Average core inflation in the first four months of this year increased by 0.97 per cent over the same period in 2021.
Furthermore, high inflation also makes real estate developers push property prices up. The whole market pushes the selling prices up, setting a new level, he said.
In the long term, the economy still faces the risk of crisis and inflation. These factors make real estate prices continue to increase.
Therefore, in the next 12 months, the housing market is forecast to continuously see price increases and slow liquidity, Kien said.
Nguyen Van Dinh, vice chairman of Viet Nam Real Estate Association (VNREA), said the property market has low transactions because asking prices are pushed up to high levels in many places. The asking price does not reflect the actual value.
Meanwhile, investors or buyers can also calculate a fair value. Therefore, buyers with real needs will not choose property products with asking prices that are too high. This leads to poor absorption in the market.
At present, the supply of real estate is very scarce. With this situation, many brokers and speculators continue to push up real estate prices. Many places have high offer prices so there are no buyers.
However, those with real housing needs will look for areas with reasonable prices and reputable investors. Therefore, projects meeting requirements on price and legal procedure will still have good liquidity, Dinh said.
Le Hoang Chau, chairman of the HCM City Real Estate Association, also said that if land prices rise against the reality of the real estate market, it will make a loss for consumers and a disadvantage for investors.
If projects offer too high housing prices, it will lead to an increase in property inventory, Chau warned. The real estate prices increase rapidly, causing unsustainable development on the market.
Lessons learned from previous land fevers show that even if it lasts for a short period the consequences are great. The price is pushed to a high level, so investments into property face difficulty due to illiquidity. Meanwhile, buyers with real needs can not reach those products because the price is too high, compared to the actual price.
Do Thu Hang, Director, Advisory Services, Savills Hanoi, said that at present, many investors have also faced a crisis because they have bought land in the fevers, though the development of infrastructure and services in the areas has not kept up with the land fevers.
Meanwhile, the asking prices of real estate products are high, so it is not easy to sell, making it difficult for project investors to move on. In fact, a number of townhouse and shophouse projects have offered a selling price that has nearly doubled compared to last year, so it is not easy to find buyers.
Real estate consultant Le Quoc Kien said many investors using idle money have bought property products since the beginning of last year and now they face high inventory because the high price makes low liquidity.