Fiscal and monetary policies are providing good support for the real estate recovery.
Sharing his views at the "Real Estate Market Report Q3/2023" launch event organized by Batdongsan.com.vn on the morning of October 4th, Mr. Nguyen Quoc Anh - Deputy General Director of Batdongsan.com.vn - predicted that the recovery of the real estate market will begin from approximately Q2 to Q4/2024.
Explaining the reason behind the above assessment, the expert said that three basic indicators of the real estate market have unfolded in line with the trend that Batdongsan.com.vn had previously predicted.
Firstly, regarding bank interest rates, Batdongsan.com.vn analyzes that during the previous crisis, it took 1.5 years from the time the State Bank of Vietnam lowered the interest rate ceiling until the real estate market began to reverse.
While it took the market four years to see any adjustments in bank interest rates during the 2008-2012 period, in this period, starting from the first quarter of 2023, the State Bank of Vietnam has already implemented two rounds of reductions in the policy interest rate, followed by further reductions in various other interest rates.
Fiscal and monetary policies are providing good support for the real estate recovery.
Secondly , regarding credit growth, looking back at 2012, credit growth decreased from 20% to 7%, while inflation rose to 8%. In 2013, credit growth increased to 12% and inflation to 6%.
"Right in the year that credit easing was implemented, the real estate market immediately showed signs of reversal. In the current market context, from the beginning of 2023, the State Bank of Vietnam has set a credit growth target for the whole year of 2023 at 14-15%, compared to 14% in 2022, which is a positive sign," Mr. Quoc Anh shared.
Thirdly, regarding real estate policy, in 2008, the liquidity of the real estate market plummeted, but it wasn't until 2013 that policies supporting the market were implemented, such as the 30,000 billion VND support package and the promulgation of the amended Land Law.
By 2022, the market repeated its sluggish trend as credit was tightened, interest rates increased, and liquidity decreased. However, from the end of 2022, the Government continuously implemented measures to alleviate difficulties for the real estate market, such as the VND 120,000 billion support package, Decree 08 to relieve the pressure of bond repayment for businesses, Resolution 33 to help revitalize the real estate market, and Decree 35 allowing provincial People's Committees to regulate areas where land can be subdivided and sold...
Based on the analysis of the above indicators, Mr. Nguyen Quoc Anh stated that he maintains his assessment: "The real estate market is likely to recover around the second to fourth quarter of 2023."
Apartments will be the first real estate segment to recover.
According to Batdongsan.com.vn's Q3/2023 real estate market report, apartments were the least affected by negative market impacts over the past year because they serve the needs of actual housing.
In the third quarter of 2023, interest in apartments showed signs of recovery, with demand for buying apartments increasing by 1% and demand for renting increasing by 6% compared to the previous quarter. Apartments priced between 2 and 4 billion VND were the most sought-after.
In 2023, apartment asking prices did not change much, increasing only slightly by 1% - 5% in Hanoi and remaining almost unchanged in Ho Chi Minh City.
However, considering the long-term period from 2015 to the present, the increase in apartment prices in Hanoi and Ho Chi Minh City has outpaced the increase in people's income. After 8 years, apartment prices in Ho Chi Minh City and Hanoi increased by 82% and 56% respectively, while the income of urban residents only increased by 39%.
Mr. Le Bao Long – Director of Strategy at Batdongsan.com.vn commented: “Buying an apartment is becoming increasingly difficult for people as the rate of income increase is not keeping pace with the rate of house price increase. In the future, primary apartment projects will also have high price levels because investors have to optimize profits as costs are pushed up.”
Accordingly, Mr. Long believes that the current price increase for apartments is being influenced by many direct and indirect factors.
Firstly, there is a supply-demand imbalance in the market, as there is still a high demand for housing from the public, but the supply of apartments remains limited, especially those within a reasonable price range and located in the inner city.
Secondly, global economic fluctuations have led to high prices for construction materials, forcing developers to increase product prices to make a profit.
Thirdly, land is scarce while land prices are constantly rising, and land in the city center is becoming increasingly limited, making project implementation very time-consuming and costly.
According to data from Batdongsan.com.vn, the land price index has maintained a stable increase nationwide from 2018 to the present, but there is a tendency for differentiation between specific regions and areas in 2023. After a long period from Q1/2018 to Q3/2023, the asking price of land in the South increased by 71%, and in the North by 54%.
For the reasons mentioned above, Mr. Long asserted that apartment prices cannot go any lower or be reduced further.
Mr. Le Bao Long – Director of Strategy at Batdongsan.com.vn.
Citing information from a report by Batdongsan.com.vn, Mr. Long also pointed out the psychology of real estate consumers. In the context of persistently high house prices, people are shifting towards renting or seeking ways to borrow money to buy a house. However, many buyers are still hesitant to take out loans because they are concerned about interest rates.
Due to the continuous increase in apartment prices and the consistently high demand for buying and renting this type of property, the average return on investment in apartments reaches 12.5% per year (including both price appreciation and rental income).
This offers a better and more stable return than other investment types such as stocks, gold, foreign currency, land, and savings accounts. This data was compiled and analyzed by Batdongsan.com.vn, comparing it with data from 2015 to the present.
According to a survey conducted by Batdongsan.com.vn, approximately 27% of real estate agents believe that apartment buildings will be the type of property that recovers earliest, predicted in the fourth quarter of 2023; 42% believe this type of property will recover in the first six months of 2024.
"Overall, this type of property is predicted to lead the recovery trend in the real estate market. The apartment market is likely to recover sooner than other types, possibly in early Q1/2024, and at the latest, it will reverse direction in Q2/2024," added Mr. Dinh Minh Tuan, Director of Batdongsan.com.vn in the Southern region .
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