The real estate market is entering the last month of the year 2021 with a strong breakthrough speed. In many areas, the volume of buying and selling transactions took place quite actively. Real estate prices in some segments recorded a sharp increase.
Mr. Cao Minh Thanh, General Director of MLAND Pro comment that in nearly 2 years of the huge impact of the Covid-19 epidemic. Real estate values received more attention after the 1st, 2nd and 3rd epidemics waves with evidence of a sudden increase in transaction volume. In the 4th epidemic wave, the market's movements are no exception when the demand for real estate investment is at a very high level, while the supply is increasingly limited.
The amount of cheap money on the market is large due to a large amount of money being injected through the banking channel and the support package, leading to an increasing trend in inflation. This makes people fear that the currency will depreciate and consider real estate as a safe choice.
"The market is showing a scenario of going back to 10 years ago in terms of high transaction speed. This is reflected in many segments such as houses, shophouses, townhouses, villas, real estate, urban resort real estate, beach resort real estate, coastal urban area are trading very well."
Mr. Cao Minh Thanh, General Director of MLand Pro
Mr. Thanh shared, the projects that his unit distributes have sold out right after "social distancing/Covid-19" until now. Some real estate projects that are continuing to wait for delivery in time before Tet are also forecasted to be out of stock quickly in 1-2 weeks. Since, there are customers who have placed deposit.
Mr Thanh also explaining the "euphoria" of the market, he said that compared to gold, savings, and stocks. Real estate is the safest investment channel in the current context. Gold investment channel is at the ceiling of low profit margin, securities are very unstable while savings deposit interest rates are very low. That's why investment on real estate is the best option.
Meanwhile, the inflation rate is tending to increase not only in Vietnam but around the world due to the impact of the pandemic. Therefore, keeping cash isn't a great idea. On the other hand, business activities in the current period are very difficult. Even most business out there at this moment aren't break even, so making profits at this point is an extraodinary thing.
"Currently, only real estate is a stable investment channel with a minimum profit of 15-20% annually. This is also a safe deposit channel because of long-term Land Ownership Certification ," - Mr. Thanh.
FDI flows and foreign currency are another market support force, pumping into Vietnam's market, increasing real estate demand.
In the supply side, Mr. Thanh analyzed that new real estate projects are very rare due to legal procedure problems, leading to scarce existing products. New projects launch in the next 2-3 years are hard to possible. The supply is increasingly scarce, real estate prices are increasing sharply while the money flow into this field is getting bigger and bigger. Causing the excitement of the market has been expected.
According to Mr. Thanh, the most vital factor that makes the market exciting is the people's optimism about the epidemic situation due to high vaccinate coverage. They also mentally accept living with the epidemic.
"The epidemic with the social distancing policies does not impact/prevent customers investment needs. Even during the quarantine period, the volume of transactions has decreased but Some projects are still trading well, through online sales to meet high investment demand."
For the question "Will the market fall into a real estate bubble and then freeze like in the 2010-2011 period", Mr. Thanh emphasized: this period and the previous period are completely different.
"At this point, there will not be a real estate/housing bubble and freeze like in 2010-2011 for many reasons. First of all, the market is now much more transparent, from information to products. Investors have also become much wiser. Second, real estate products at this stage are more visible, reflected in clear legislation and synchronous infrastructure. In particular, the increase in real estate prices is not due to a virtual fever, investors are no longer blindful following with the majority like in 2010. Real estate prices in this period increase in value, due to the development of excellent infrastructure and high quality project. Although the market fluctuates, the project has real values products are still well liquid. Unlike the period 2010-2011, most real estate projects are still on paper, not yet fully legal, and still be launched into the market for transactions. At that time, the customer is buying a product formed in the future that has no existing value. For those reasons, the government tightened transactions causing the demand for real estate investment dropped rapidly. Products with no existing value are difficult to liquidate. At the current stage, the worst scenario is a stop/cut loss. Freezing situation is another scenario could happen in some local/areas but will not be spread and affecting the whole market. Which is an advantage for existing products that has clear legality. Another positive factor is that the government is controlling interest rates and inflation very well."
By Viet Thanh