Real estate market slowing down, experts divided on bubble risk

Jul 2nd at 14:54
02-07-2022 14:54:36+07:00

Real estate market slowing down, experts divided on bubble risk

As moves are taken to control the credit flow into certain segments, while localities seek to tighten the land lot split, the real estate market could slow down, but experts remain divided on the risk of the bubble bursting.

 

In recent years, land prices increased rapidly despite the impact of the COVID-19 pandemic.

According to a report by the Department of Housing and Real Estate Market Management under the Ministry of Construction, land prices, especially in localities planning or developing infrastructure saw whopping increases.

The moves to control credit flow into the real estate sector and land lot split were cooling the market, with falling liquidity but prices staying at high levels.

A report by real estate portal batdongsan.com.vn showed that searches for property on sale via the portal in the first five months of this year dropped by 11 per cent against the same period last year.

Nguyen Quoc Anh, deputy director general of batdongsan.com.vn, said the market was slowing down significantly with interest in buying a property decreasing by 9e per cent.

The number of listings for sale increased by 22 per cent, especially land by 38 per cent, reflecting that investors and trading floors were struggling and the easy period was over, he said.

Quoc Anh said that many banks had run out of credit room for real estate loans, together with increases in taxes on real estate transfers, which was making profits less attractive. Therefore, investors were more cautious when putting down their money.

According to Dang Hoai Nam, director of Tien Phuoc Real Estate Joint Stock Company, the market was slowing down but wasn't frozen, providing opportunities for products with real value. “The slowdown is a wake-up call for investors and an opportunity to purify the market,” he said.

Nam pointed out that products which were in strategic locations with synchronous infrastructure and adequate facilities and services would be more attractive to buyers, especially amid a shortage of quality products in rapidly developing urban areas such as HCM City.

Nam said that it was time for developers to review their investment strategy to move toward customers’ demands.

Su Ngoc Khuong, senior director of Savills Viet Nam, said that the market was facing low supply and high prices, resulting in limited liquidity, predicting that the trend would continue till the end of this year.

According to financial and banking expert Le Xuan Nghia, while the market was facing a serious shortage of supply due to legal problems hitting housing development projects, the tightening of capital flow into the real estate market, including credit and corporate bonds, would worsen the situation.

Nghia said that he was worried that a market bubble could occur and burst like in the 2011-12 crisis, stressing that careful consideration should be given to the moves of tightening credit and bonds into the real estate market. In addition, measures to stabilise the market must be developed, he said.

The Viet Nam Association of Realtors said that rising house prices but low liquidity was a signal that the market was in a partial bubble. Notably, house prices also increased following land prices and established new levels in many places but the transaction volume remained modest.

Meanwhile, some said that there was no sign of the market bubble bursting.

Citing statistics of batdongsan.com.vn, Quoc Anh said that the real estate prices remained high because there was still huge market demand while the supply was limited. It would be difficult for housing prices to drop in this situation, he said.

In addition, market liquidity falling in recent months was partly due to speculators escaping the market, he pointed out.

He forecast housing prices would continue to increase, however, the pace would not be as strong as in 2021, especially for projects with adequate legal status and good locations. 

bizhub



RELATED STOCK CODE (1)

NEWS SAME CATEGORY

The 9 Stellars developed by SonKim Land scores five prestigious awards

The 9 Stellars developed by SonKim Land and investor Ngan Thanh has bagged five prestigious awards at the Asia-Pacific Property Awards 2022 on June 23 in London.

Housing prices in Ho Chi Minh City hit record highs

Real estate prices in Ho Chi Minh City skyrocketed during the second quarter of this year to hit record highs, with some villas in the city currently on sale for...

HCM City apartment supply surges in Q2

The HCM City apartment market went through a supply boom in the second quarter of 2022 compared to a lacklustre first quarter, and is expected to completely recover...

Ring road plan to transform market

Concerns are being raised over how to ensure efficiency and improve real estate prospects, as projects to set up Ring Road 4 in Hanoi and Ring Road 3 in Ho Chi Minh...

LIXIL announces continuing support for the Asia Pacific Property Awards

LIXIL, maker of pioneering water and housing products, announced the winners of the Asia Pacific Property Awards 2022-23 through its sponsor brands GROHE and...

Global providers’ expansion plans make Hanoi coworking supply rise

The Vietnamese coworking market is growing exponentially as more and more people become aware of the benefits this niche brings from a business and productivity...

Limited period ownership of apartments under debate

Currently millions of people living in apartments in Vietnam are feeling insecure about a new draft proposal sent by the Ministry of Construction on a limited...

Fusion Resort & Villas Danang celebrates premium launch

Danang Nam Phat Villas & Hotel Co., Ltd. – a member of Lodgis Hospitality Holdings – is pleased to announce the official launch of the Fusion Resort & Villas...

Second-home market blossoms in Danang

Second-home properties in Danang are expected to gain more attention through the recovery of the economy.

Urban planning essential for Hanoi to realize economic potential: Experts

Effective urban planning would help Hanoi better utilize urban economic models for sustainable development.

Real estate stocks

Construction stocks


MOST READ


Back To Top