Land prices drop sharply after "land fever"
The real estate market in 2023 has just ended with gloomy developments in all segments. Segments considered for speculation such as apartments, villas, condotels, especially land plots witnessed a sharp decline, the highest up to 30-50%, in the secondary market.
The recent real estate market report of the Vietnam Association of Realtors (VARS) shows that the land market is no longer as "hot" as before. Land products have experienced many price reductions, with losses of up to 30-40% but are still difficult to liquidate. However, this reduction is understood to be compared to the peak of the fever, still not really close to the real value.
The situation of land being sold at a loss has occurred in many places recently (Illustration: Ha Phong).
Mr. Nguyen Van Duc - a real estate broker in Bac Ninh shared - since mid-2022, land prices in urban areas in Bac Ninh have stagnated and decreased, with some cases of deep losses due to poor market liquidity. In the last few months of 2023, the land market has resumed transactions, but not much, mainly in plots of land with good locations being sold at a loss of 20-30% compared to the peak of the "land fever" - early 2022.
Similar to Mr. Duc's above sharing, many real estate brokers in Hanoi said that land prices in suburban districts of Hanoi such as Me Linh, Thach That, Ba Vi... have decreased since mid-2022 until now. Notably, areas that depend on infrastructure such as Ring Road 4 will likely continue to be gloomy. To quickly sell off their goods, investors may have to continue to reduce prices by another 10-20%.
"In December 2023, the number of people selling land at brokerage offices decreased by nearly half compared to the previous November. However, the current selling price has decreased, some cases of borrowing for speculation, reaching the limit of tolerance, forced to increase the loss cut from 20-50%", Mr. Nam - a broker in Me Linh district shared.
Land parcels left abandoned in large numbers in Thach That district, Hanoi (Photo: Ha Phong).
Closely following the developments of the land market, Mr. Tran Quang Huy - a real estate investor in Hanoi - said that it is likely that the type of garden land used for homestays and accommodation areas "following" the trend of leaving the city to return to the countryside, which has been "hot", may have to decrease in price by another 10-20%.
Land is still the "king" of investment
It can be seen that land has significantly cooled down compared to its peak. However, according to experts and experienced investors, land has only cooled down compared to itself, but compared to most other types, it is still the most attractive segment for big players who need to shelter long-term cash flow.
According to Mr. Pham Duc Vinh - a person with more than 10 years of experience in land investment - land investment is attractive thanks to its high profit margin, the price increase wave of land is much shorter than other types, usually land investors can close the profit after 2-3 years.
"Individual investors and "sharks" are still trying to buy land in areas with high price increases. The difference between current land investors and when the market was hot is that they have strong capital and are determined to invest long-term instead of those who surf the waves or use financial leverage," Vinh shared.
Landowner in Thach That district, Hanoi hangs up a sign for urgent sale (Photo: Ha Phong).
Mr. Dinh Minh Tuan, Director of a real estate information channel, said that in the long term, land prices may continue to increase and transactions will return. Real estate prices depend on other factors such as infrastructure development, economic growth, and people's income.
Meanwhile, land is a type that any member of the market can invest in due to the diversity of area, price, and region. In localities with economic growth, the land in this place will still grow sustainably.
Also assessing the potential real estate segment for long-term investment, Mr. Nguyen The Diep - Vice President of Hanoi Real Estate Club - commented that "land is still king". Investors with available capital or using low financial leverage can consider investing.
This expert recommends that investors should consider carefully to avoid falling into the "price reduction trap". In particular, at this time, investors should avoid buying land according to planning information because the price is high, the profit is low and slow. If you decide to invest in planned areas, you should calculate carefully, choose a location with high implementation prospects and fast liquidity.
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