Each week we post a news flash with notable articles related to the real estate market in Vietnam. We asked our team to pick the top stories from the past month and we’ve tallied the results. Check out the headlines that made big news in our office below. Have any of the articles we’ve shared impacted you? Is there any important news we’ve missed? We’d love to hear from you!
Our CVR team is here to answer your questions at any time. Whether buying, selling, renting, or opening a business, contact us to talk about your real estate needs today.
Your Friends at Central Vietnam Realty.
APRIL 2023 CENTRAL VIETNAM REAL ESTATE NEWS SUMMARY
1. An Explanation for the low income of Vietnamese but high real estate price
According to Prof. Dr. Hoang Van Cuong, real estate is often seen as a valuable asset, and people not only buy it for personal use, business, or consumption but also as a means of accumulating wealth for future generations.
On April 21, the National Economics University hosted a conference in conjunction with the Central Economic Commission and the National Assembly’s Economic Committee to evaluate Vietnam’s economy in 2022 and its prospects for 2023, with a focus on stabilizing and developing the real estate market. Despite the difficulties and uncertainties in the global economy, Vietnam’s economy has made remarkable strides in 2022, following a sharp decline due to the Covid-19 pandemic. Inflation and macroeconomic indicators are generally stable, but there are still some concerns, particularly the poor health of the monetary and financial system, which could have a negative impact on Vietnam’s macroeconomic stability and economic growth.
The reason for this is that real estate is regarded as a capital preservation investment by many Vietnamese people, who see it as an essential asset to accumulate for future generations. This mindset is ingrained and is unlikely to change anytime soon.
2. Apartment prices are expected to increase by 4-7% in the near future
Currently, the real estate market is still moving quietly, according to which the selling price in some segments such as townhouses, villas, and land plots is falling quite deeply compared to the time of fever. However, the apartment segment that meets the real needs of the people has had the opposite situation as prices continue to increase.
CBRE forecasts that in 2023, primary prices will increase by 4-7% per year over the next 3 years thanks to upgrading the positioning of urban projects and planning to launch high-end and luxury projects in other areas. Prime location.
Many experts forecast that in 2023, in the Hanoi market, the apartment segment will be more interested in low-rise products. The price of low-rise products in the market is currently anchored at a high level. With newly launched projects with reasonable prices, good locations, reputable investors, product quality, and guaranteed legality, there is still a large amount of demand that decides whether to buy to live or invest in the long term.
According to Mr. Le Dinh Hao, Sales Director of Batdongsan.com, in big cities like Hanoi, Ho Chi Minh City, etc. In Ho Chi Minh City, the price of the apartment segment will continue to stay high. Notably, apartment prices in established and inhabited projects will continue to increase in the near future.
The reason is that at present, the supply is scarce. In addition, many businesses still have not been able to remove capital, have not been granted land funds to implement projects or have legal issues, which makes the supply increasingly narrow, creating pressure to keep prices in the market, a high level. The scenario of a deep drop in house prices is unlikely.
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3. Affordable apartments return to the market
The article on Cafeland reports that affordable apartments are returning to the Vietnamese real estate market after a period of slowdown. The demand for affordable apartments is increasing due to the economic impact of the pandemic, which has caused financial difficulties for many people. Developers are responding to this demand by launching affordable apartment projects, with prices ranging from VND 700 million to VND 1.5 billion.
These apartments are typically located in suburban areas or in the outskirts of cities. The article also notes that the government is taking steps to support the development of affordable housing, including providing loans to developers and offering incentives for buyers. Overall, the article suggests that the trend toward affordable housing is likely to continue in the coming years.
4. 3 reasons why a series of real estate projects fell into difficulties and problems
According to the Ministry of Construction, there are three typical reasons why projects encounter difficulties and obstacles.
First, the reason is related to the law on land.
Second, the reason is related to the law on planning.
Third, the reason is related to the law on investment.
The Ministry also requires the implementation of publicity and transparency of construction planning information, lists and implementation progress of infrastructure development projects, real estate projects, especially large projects, and mergers and acquisitions, import, establish and upgrade local administrative units, prevent spreading rumors and speculation to push prices up for illegal profiteering.
5. Investors participate in the acquisition of land near urban areas
- The price of land near the city is still down compared to the time after the Lunar New Year 2023
After Tet 2023, the land market in the suburbs of Hanoi recorded a decline compared to the end of 2022. Up to now, although the real estate market has received positive signals when the Government has issued drastic measures to remove difficulties for the real estate market, the actual movements of the market are quite slow.
Although the deposit interest rate has decreased, the loan interest rate has not gone down and the credit room has not really opened, making the market still face many difficulties. This is also the reason why the ground is still quiet.
- “Shark” in the hunt for the bottom of the land
The reality of land price decline has led to a wave of “import” of investors with abundant capital. Many investors with good financial potential have chosen this opportunity to buy goods. Many investors with available cash had started hunting since March when they realized that weak financial investors, using financial leverage, were looking for a way to “exit”. Market transactions are most concentrated in the land plots with deep discounts, from 30% or more. especially the group of buyers with real housing needs
Professional investors all think that by the period 2024-2025, the real estate market will gradually improve, this is the right period to buy products at reasonable prices compared to the common ground.
6. The real estate market has many opportunities to reverse from the fourth quarter of 2023
Mr. Dinh Minh Tuan, the Director of Batdonsgan.com.vn in the South region, predicts that the real estate market’s reversal signal will occur around Q4 2023 or Q2 2024.
However, he believes that the market’s recovery could happen faster if the government issues policies to support it. Meanwhile, Mr. Jules Kay, General Director of
PropertyGuru Asia Property Awards emphasized that Vietnam’s real estate market is one of Asia’s leading markets, with plenty of room for growth, and reflected this in the awards given to outstanding real estate developers and projects in Vietnam each year.
Additionally, a report shows that 68% of survey respondents plan to buy property within the next year, with a higher percentage for those who already own multiple properties. The primary real estate attracting attention is in the price range of 2.5-5 billion dong. Therefore, it may be beneficial to invest in properties now while prices are still reasonable before the expected real estate growth leads to higher prices.
7. Real estate in Vietnam is the most sought-after in the region
Less than a month, the State Bank (SBV) officially reduced the operating interest rates for the second time. This move clearly shows the Government’s goal of reducing lending interest rates to promote economic recovery.
Bank interest rates dropped simultaneously:
As of mid-April 2023, all commercial banks (commercial banks) have simultaneously lowered the ceiling interest rate for deposits with terms less than 6 months by 0.5% right after the decision of the State Bank
In a recent analysis report, KB Vietnam Securities Company forecasts that by the end of 2023, the deposit interest rate will tend to decrease and may remain around the threshold of 7 %/year, corresponding to the interest rate level. average loan at 10%/year (for the average 12-month term of state-owned banks).
This is a good sign for interest rates in the coming time, removing financial difficulties for homebuyers who need the bank’s support
The input price of real estate will increase in the time of 2023-2024:
Construction materials are still gaining momentum, in the first quarter of 2023, the domestic price of construction materials continuously increased. causing many construction contractors to fall into a state of loss, directly affecting the construction progress of ongoing projects and not daring to accept new projects. In addition, the draft Land Law (amended) requires investors to be responsible for compensation at market prices, if passed, it will certainly push up the input prices of projects.
So this is the right time to own real estate value. Please contact CVR for a more suitable property
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