Limited supply pushes up home prices
According to data from the Vietnam Association of Realtors (VARS), real estate prices have increased dozens of times over the past 10 years. In 2021, the average house price grew by double digits, even many times higher than the same period last year. Low interest rates and record high inflation are factors contributing to the sharp increase in house prices, but the core of the problem is the decline in supply.
Real estate prices will increase at different rates in different regions and markets, largely depending on the balance of supply and demand. However, overall, house prices may not increase much in 2024. The drastic solutions to remove difficulties for the real estate market have taken effect. The supply side of the market has accessed credit capital flows.
However, housing loans are on the decline. Because in the context of economic difficulties, home loans to serve real housing needs are not the top priority of people at the present time. Moreover, the existing supply in the market is not suitable for the needs and financial capacity of the majority. In addition, "strict" lending conditions, difficult to satisfy, along with a risky investment and business environment, force investors to be more cautious, causing the number of potential customers participating in the market to decrease.
Difficulties in developing social housing projects, including handling investment procedures, accessing capital, sales... will also directly affect housing prices because it affects the progress of housing handover and construction.
Recently, the risk of bad debt has increased, forcing banks to continuously sell thousands of real estate products to recover debts. Millions of loans with real estate collateral are expected to mature in the near future. The results of these loans and how businesses choose to handle these finances can affect home prices. Whether borrowers choose to sell their homes or have their homes foreclosed on will increase the supply of homes, thereby slowing the rate of price increase in the market.
According to VARS experts, the apartment segment in big cities will continue to increase steadily because supply has not yet adapted to the needs of customers and investors.
Real estate price increase link
To increase access to safe and affordable housing for people in the context of population growth and urbanization, it is necessary to solve the most important link in the chain of increasing real estate prices - the lack of supply, due to the under-utilization of land. At the same time, it is necessary to use tools to regulate supply and demand for the market to develop substantially.
According to VARS, first, it is necessary to tighten discipline in planning, appraisal, approval and implementation. Second, it is necessary to eliminate suspended planning and build a separate legal corridor for land trading in planned areas.
At the same time, it is necessary to strictly control the management experience and financial capacity of the contractor to ensure project progress, avoid financial loss and waste of resources. It is necessary to study the plan to apply appropriate tax rates to accumulated assets according to the quantity and scale of real estate owned to reduce the motivation for speculation. At the same time, there are credit policies to limit speculation.
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