Positive signal
Since September 2023, with the State Bank reducing the basic interest rate 4 times, along with lending interest rates and deposit interest rates decreasing by 2-4% compared to before, other investment channels have the opportunity to receive capital from banks and credit institutions. Recently, some non-state commercial banks have also announced short-term loans to support liquidity, consumer loans, and housing construction at about 4.5-5%/year.
A representative of the State Bank of Vietnam, Nghe An branch, said: Regarding the VND120 trillion support package for investing in social housing projects, although the loan interest rate has been fixed at 8.2% and 8.7%/year for home buyers or social housing project investors, respectively, it is expected that every 6 months, the State Bank will consider adjusting the interest rate down.
By November 2023, commercial banks will continue to lend for investment in home construction and repair as last year. Depending on the assessment of the borrower's liquidity, banks will apply interest rates from 7.0% to 8.5%/year. The shorter the loan term, the lower the interest rate and vice versa.
Regarding real estate investment loans, up to this point, commercial banks have only lent to real estate investment projects that ensure legality. The 120 trillion VND loan package has only businesses that are researching and have not yet completed loan applications, so there has been no outstanding debt.
State Bank - Nghe An Branch said that as of October 30, 2023, outstanding loans for the real estate sector in the area were VND 23,865 billion, accounting for 8.2% of total outstanding loans, an increase of 8.7% compared to the end of 2022.
Previously, informing reporters, a representative of the State Bank of Vietnam's Nghe An branch also said that although interest rates have decreased sharply, due to the difficult production and business situation and the increase in remittances, the amount of idle money deposited in banks has increased steadily.
According to an economic analyst, although interest rates have decreased and the Vietnamese Dong (VND) has depreciated, in the context of other investment channels such as gold and stocks being quite risky, savings are currently a safe haven. In the near future, if the real estate market, especially auction areas, offer reasonable prices, lower than before, investors will consider and it is very possible that the cash flow will reverse and shift to real estate investment channels.
At the end of the year, with the amount of remittances sent back by children working abroad, many families are also considering investing in land. Attending the land auction in Dien Hai commune (Dien Chau), we witnessed 2 families in hamlet 1 discussing participating in the auction of a plot of land. Mr. NKK, hamlet 1, Dien Hai commune said that his son has been working abroad for over a year now, and is married, so he discussed with his in-laws to buy 2 bidding documents for a planned plot of land with an area of 180m2 , the starting price is 614 million VND and they expect to bid up to about 700 million VND. However, there are many documents from outside the commune participating in the auction, so the 2 men are worried that the successful bid price will likely exceed 700 million VND, or even over 800 million VND...
Mr. Le Tuan Thinh - representative of a trading floor that just participated in the auction of a 33-lot planning area in Xuan Hoa hamlet, Nghi Duc commune (Vinh city), analyzed: After 2 years of stagnant land prices and a 20-30% decrease compared to before, only good planning areas and suitable starting prices have applications to participate in the auction.
According to the Department of Labor, War Invalids and Social Affairs, with over 88,000 contract-based workers, Nghe An receives remittances from abroad of 650 million USD each year, equivalent to 15,000 billion VND. If we include over 20,000 workers who go abroad freely through other channels, the annual remittances are about 1.4 billion USD, equivalent to nearly 35,000 billion VND. If savings interest rates remain low and only 30% of the above amount is transferred to the real estate market, land auctions will have a chance to gradually "warm up".
Forecasts
When will the real estate market recover? Following the situation and developments of the real estate market over the past few years, we realize that this is not an easy question to answer. At a recent workshop organized by the Business Forum Newspaper, experts and experienced real estate investors were quite cautious when making their comments. Accordingly, we hope that interest rates will decrease and investor confidence will return by the end of 2024.
Mr. Nguyen Van Ba - Vice President of Nghe An Real Estate Association, shared: The recent auctions with many participants and successful auctions in Vinh City and Dien Chau District were quite positive. In Hanoi, the land auctions in early December in the suburbs, which are about to become urban areas, also had more buyers. This is different from a year ago... However, it is too early to confirm that the real estate market has "warmed up".
A representative of the Tecco trading floor in Nghe An added: This year, the Group has no new products in Nghe An, but the market has been more active than 3 months ago and only customers with real needs have placed orders. Currently, not only in Nghe An but also in the average apartment transactions nationwide are quiet. This is inevitable, because this year the economy is difficult, businesses lack orders, workers lack jobs...
Talking to us, Mr. Bach Hung Hau - Deputy Director of the Property Auction Service Center (Department of Justice) said that the number of people with real needs to buy is higher, but the situation of land auctions and brokers participating in auctions and then surfing for profit still exists. The land auctions in Do Luong, Nghi Loc, Dien Chau districts and Vinh City have many buyers because of the beautiful planning area, high profitability and suitable starting price. These auction areas are often bought by the auction floors for more than half of the lots and after the auction is completed, they are transferred for a difference of 50 to 100 million VND/lot. However, there are also planning areas such as Dien Loi, Dien Dong communes (Dien Chau) and Nghi An commune (Vinh City) that have not had any buyers despite multiple announcements.
A member of the auction supervision team of Dien Chau district shared: Normally, the more participants in the auction and the higher the bid price, the better, but if the increase is too high, including the dominant participation of the floors like in 2021, there is a fear of losing the deposit.
Meanwhile, Mr. Nguyen The Anh, a real estate broker in Nghi Phu commune (Vinh city) who regularly goes to Da Nang and Ho Chi Minh city to connect transactions, said: Currently, the real estate market nationwide has bottomed out, mostly sideways, with not many transactions. Monitoring the market, we see that only the auction segment in Nghe An and Hanoi is a bit more active, with more substantial transactions thanks to the amount of remittances sent back by people, and the auction floors participating in the auction. Compared to large cities, Nghe An market is small, and whether it will "warm up" sooner or later depends on the actions of large markets. To maintain the excitement and create the premise for the following year, it also depends on the situation of attracting investment, attracting workers and experts to Nghe An to work; thereby creating the need to rent and own houses... In addition, when the exchange rate of the Euro (Europe), US Dollar or Japanese Yen is stable, the amount of remittances sent back is large, then rural land auctions will have more impetus to flourish.
Commenting on market trends, a representative of the Nghe An Province Land Fund Development Center said: Entering 2024, localities need to review and put planned areas up for auction at a more reasonable price to attract investors, creating a positive psychological momentum for the market.
Another important information related to the real estate market next year is the Housing Law, the Real Estate Business Law and especially the new Land Law that will be passed. If the National Assembly finalizes the tax plan for people owning a second or more property and the Government requires land and real estate transfer transactions to be paid by bank transfer, and strengthens inspection and verification to prevent tax evasion, the market will be more or less affected./.
Source
Comment (0)