Should I borrow money from a bank to invest in land during a time of high inflation?
That is the view that an investor named NL, who has experienced the cycle of growth and decline of the real estate market. This investor argues that the real estate market will still be on the way to the top. The peak of real estate falls in 2024, which means that horizontal investors can completely buy at the present time and finalize the period at the end of 2023 and early 2024. A period of 2 years is enough for a property. Property doubled when information on infrastructure investment was being promoted.
Talking about the risk of bank loans when inflation increases, Mr. NL affirmed that even if the interest rate increases, it cannot exceed the level like in the late 2010s and into 2011. The basis for this statement that Mr. L Given that, in the 2010-2013 period, many banks defied the ceiling regulations and raised interest rates. However, in the current period, the management policy of the State has been strict. Therefore, it will be difficult for banks to offer a very high interest rate up to 17% as before.
According to Mr. L, looking at the real estate market movements, the opportunity for profit is still great. Mr. L, for example, before that, investors were concerned about the market because of the fear of reduced liquidity. But the situation of land prices increased by occurrence in some areas. Therefore, Mr. L. emphasized, land continues to increase and investors fully use financial leverage to find profitable opportunities.
Analyzing from a cautious angle, experts say that at the moment, it is advisable to consider when using financial leverage. The movements of the real estate market in the coming time are difficult to predict. Meanwhile, the actual price level has risen too high.
Dr. Dinh The Hien, an economist, said that real estate investment is no longer as profitable as before, because in general, every area has increased in price.
According to Savills World Research, if inflation occurs due to economic growth, real estate demand will be pushed up and help increase the value of real estate.
However, where inflation is caused by costs such as raw materials, rising labor costs (cost-push inflation) will lead to a constraint on the supply of real estate. Cost-push inflation is also difficult to predict, often due to unforeseen events such as environmental, geopolitical, etc.
In a recent talk, Mr. Vo Huynh Tuan Kiet, Director of CBRE Vietnam’s Housing Marketing Department, said that if there is a huge fluctuation in the financial situation, the value of money will be affected, inflation will be affected. output will increase. When currencies depreciate, investors look for a safe haven like real estate.
Mr. Kiet also said that real estate has periods of steady increase in price, periods of slow growth and even periods when it will not increase. If most investors do not buy real estate during the “bubble” market, the value of real estate will be maintained stably and even increase.
If you buy real estate during the land fever period or buy it at an incorrect value, the impact on cash flow is natural.
When investors buy real estate not at its true value, they face the risk of difficulty in liquidity. If borrowing from a bank, investors are under great pressure on loan interest.
Dr. Su Ngoc Khuong, Senior Director of Savills Vietnam, said that when inflation occurs, real estate prices increase. But the market will not be able to buy, there is no liquidity. This means that many investors also use financial leverage to invest in real estate, making low-liquid assets a great burden for them as well as putting pressure on the banking system. Mr. Khuong recommended that investors using financial leverage at the present time must be very cautious.
at Blogtuan.info – Source: cafebiz.vn – Read the original article here
