Real estate prices increase but it is difficult to liquidate, revealing the phenomenon of “profit on paper”
The level of interest in land plots in many provinces has increased
The market report for the first quarter of 2022 of Batdongsan.com.vn shows that the real estate market has a steady growth in both interest and postings. Inflation is becoming a concern about real estate prices in the near future. The movement of the market is shown through data on postings (representing supply) and interest (representing demand) in each type and region.
In February, real estate interest increased in almost all categories with an average increase of 23% compared to January. Ho Chi Minh City and Hanoi had an increase of 29% and 22% respectively.
Notably, the type of land plot and project ground has a strong increase in interest in many provinces. In which, Lam Dong, Khanh Hoa and Da Nang are the three areas with the strongest increase, respectively 41%, 35% and 32%. The two big cities Ho Chi Minh City and Hanoi had an increase of 18% and 8% respectively.
Recognizing the trend of increasing demand for land plots, experts of Batdongsan.com.vn said, due to concerns about price slippage & inflation when money is pumped into the market through economic stimulus packages. and public investment disbursement, the need to accumulate assets attached to land as a safe haven will increase this year.
(Photo: Batdongsan.com.vn)
For the group of mainland real estate, land plots are more affordable than townhouses, villas or shophouses, so they will attract quite medium-sized capital flows or more. However, the phenomenon of fever on a large scale in the market is unlikely to happen, but only locally in some localities benefiting from planning and infrastructure.
The remarkable point in the first quarter is that the demand for apartment search increased sharply in both big cities, Ho Chi Minh City and Hanoi, focusing mainly on the affordable segment.
Specifically, in February, affordable apartments in Ho Chi Minh City and Hanoi both recorded a strong increase of 36% compared to January, far exceeding the interest of private houses and land plots.
Apartment prices in Hanoi in February also increased by 4.4% compared to December 2021. Meanwhile, the price of affordable apartments in Hanoi in 2021 has grown by 8%, reaching an average of about 23.5 million/m2. Prices of luxury apartments also increased 5% to 32.5 million/m2, while high-end apartments increased 3% to 45.5 million/m2.
Liquidity is not proportional to price increase
According to the General Statistics Office (Ministry of Planning and Investment), on average, in the first two months of 2022, CPI increased by 1.68% over the same period last year, core inflation increased by 0.67%. The world political situation also affects production and business activities in Vietnam.
Big data of Batdongsan.com.vn shows that, under the impact of increasing prices of oil, precious metals and construction materials, real estate prices in the first quarter of 2022 tend to increase and are forecast to continue to increase in next time.
Mr. Nguyen Quoc Anh, Deputy General Director of Batdongsan.com.vn said: “Although real estate prices increase, the liquidity will not necessarily be proportional because it depends on many factors”.
Therefore, individual investors, especially investors using financial leverage, need to pay attention to two aspects:
Firstly, it is necessary to pay attention to survey the price level in the areas, because real estate prices in the North in many places have increased 3-5 times in the past time. The anchor price is at a high level, so there may be difficulties in liquidity.
Second, it is necessary to pay attention to the movement of investment cash flows. As noted by Batdongsan.com.vn, the cash flow is diverting from the North to the Central region.
Assessing the current real estate market, Dr. Su Ngoc Khuong – Senior Director of Savills Vietnam said that both the residential and commercial segments in Vietnam are assessed to increase significantly in the coming time and are an investment channel to help reduce risks in the context of inflation. broadcast.
“However, when inflation occurs, although real estate prices increase, but the market cannot afford to buy, there is no liquidity. At the same time, many investors also use financial leverage to invest. real estate, making low-liquid assets become a big burden for them as well as putting pressure on the banking system”, emphasized Savills Senior Director.
“I think that in the current complicated context, it is especially important to carefully consider when using financial leverage to invest in real estate, to avoid repeating the situation of “dead on the property pile.” has happened in the past.
In the next 9 – 12 months, it is possible for some investors to be forced to sell off assets because they cannot bear the pressure from financial support tools. However, the speculative nature of this group is not large, it is difficult to manipulate the market, affecting the price level,” emphasized Dr. Khuong.
Besides, the supply of housing in Vietnam in the coming time is still very limited, so a reduction in real estate prices is very unlikely.
That is why, Dr. Su Ngoc Khuong recommends: “For investors, before deciding to put money down, it is necessary to pay attention to the price and legality of real estate. For investors who intend to sell real estate at this time. , it is necessary to carefully consider the purpose of using the money after the sale of that property.It is reasonable if this money is invested in more effective investment channels in the context of the epidemic, international political instability. “.
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