If interest rates increase, how will the real estate market where there was a virtual fever?
The concern of investors in the real estate market is that the loan interest rate factor will increase. Because, this move will have a strong impact on the real estate market. Especially recently, the US Federal Reserve (Fed) raised interest rates for the first time since lowering interest rates to near zero amid the Covid-19 pandemic outbreak two years ago.
According to real estate investors, the Fed’s decision to raise interest rates will also likely affect the increase in lending rates in Vietnam. Mr. Tran Q. (leader of a real estate business in Hanoi) commented: “When the Fed raises interest rates, it is easy for Vietnam to increase interest rates in the near future. It may not happen immediately. ie, but the adjusted interest rate is expected in the third and fourth quarters of 2022.
According to Mr. Q. In case the lending interest rate in Vietnam increases, the real estate market will certainly be affected. Because of the fact, 50-70% of real estate market participants use financial leverage. If lending rates rise, a wave of sell-offs will appear. The area where the virtual wave occurs will be dropped first.
Mr. Q. further analyzed: “The segments and areas where the hot growth occurs will be affected. For example, real estate in the province, in recent years, has increased too strongly while in fact the unused value is low. And for investors who borrow a lot, they may face pressure to repay interest and force to sell to cut losses. There will also be people going bankrupt in case of too much debt.”
Mr. Q. said, for example, in the area along the ring road 4 in Soc Son, there is a land lot increased from 6 million VND to 30 million VND/m2. “Increased 5 times in a short time without infrastructure construction. That is, those land lots are increased beyond their current value. Places that increase hotly, exceed the current value will have to return to the correct value as inherent”.
However, according to Mr. Q., there will still be places where the temperature will increase, especially in areas with changed and improved transport infrastructure. In 2022-2024, the wave of public disbursement will continue, where the steady increase will continue to be of interest to investors.
Analyzing more about the impact of interest rate hikes on the real estate market, Mr. Q. said: “In the previous period, investors could almost always make money wherever they went. medium- and long-term investors are equally interested in real value, but at the present stage, rising interest rates will act as an indicator of the true status of each region and each segment. react immediately.
Until then, the market will sort out. Investors using financial leverage, surfing, no experience, no knowledge will have difficulties. And investors who can correctly determine the true value of each area, knowing the assessment of the general market will not be greatly affected by rising interest rates. In particular, in virtual wave zones, it will be difficult for investors to get out of the goods in time and even “hit the waves” again is difficult to do.”
Meanwhile, Mr. Cao Minh Thanh, General Director of MLAND Pro, increasing lending interest rates is one of the macro tools to squeeze cash flow into the real estate sector. According to Mr. Thanh, increasing lending rates will limit cash flow into the real estate sector, leading to this investment channel will be hungry for capital.
Investors using financial leverage will have to sell at a loss because of the pressure to repay. However, according to Mr. Thanh, although lending interest rates increase, the real estate market will not repeat the movements of 2011. The reason is that current real estate products are fully legal and home All investments can be sold at a loss.
Business and Marketing
at Blogtuan.info – Source: cafebiz.vn – Read the original article here
