Mr. Nguyen Van Dinh, Chairman of Real Estate Brokers Association Vietnam (VARS) forecasts that by 2023, when there is a new credit room, the real estate market will gradually recover.
This expert said that the real estate market has just experienced a year full of ups and downs, with the beginning of the year full of “excitment”, but from the middle and the end of the year, it turned to a long quiet state. One of the main reasons leading to the difficulties of the current real estate market is the problem of capital flow.
“Real estate developers only have about 20% of cash available for site clearance, the remaining 80% of the project development money must be borrowed. Meanwhile, bank credit and bonds are available. Real estate is the two most important channels for capital, but these two channels are simultaneously being tightened, causing many real estate businesses to be forced to stop, delay or postpone projects for a long time because lack of capital, leading to poor liquidity and reduced revenue. Even many businesses that are too difficult have been forced to lay off their workforce. In addition, it is difficult for real estate buyers to access resources and credit capital, and the demand for loans is limited due to the sharp increase in bank interest rates,” Dinh said.
Sharing the same view, Ms. Duong Thuy Dung, Senior Director of CBRE Vietnam, said that not being able to access loans is a problem for individual investors and investors at this time. When the market is difficult, where does the capital come from and what is the capital solution is causing many investors a headache.
For individual investors who have borrowed from a bank to buy real estate, if they return it to the investor, it is easy to take risks when there is a penalty in the purchase and sale contract. Very few investors notice this. Since then, leading to the story, many investors are trying to “go hard”, and it is not clear when they will be able to. “It is likely that there will be a sell-off in the near future when the credit policy is not properly relaxed. Although the purchasing power in the market is still available, there is no source of goods to buy and investors cannot find it. Loans are the main reason why some real estates may fail,” said Ms. Dung.
“This is a rather sensitive time for the real estate market. Investors can’t be in a hurry like before. Capital for investment is the biggest barrier at this time,” emphasized Ms. Dung.
Predicting market movements in the coming time, Ms. Dung said that real estate will continue to face many difficulties and challenges including supply continues to be limited, especially supply in the mid-end segment and the mid-end segment. affordable. For those who buy to stay, there will not be many options because most of the new supply will be concentrated in the high-end segment and above.
Although the credit tightening policy is gradually being eased, access to capital is still extremely difficult for both individual investors and institutional investors (project investors). The difficulty in accessing bank loans combined with the continued increase in house prices caused the market’s liquidity to decrease more or less. This must be “opened” in 2023 for the real estate market to develop stably. The capital factor determines 70-80% of the recovery of the real estate market.
Along with that, information on the market related to legal changes (regulations on apartment ownership period, imposition of property tax, etc.) as well as market investigations into irregularities investors can affect the psychology of buyers.
According to Ms. Dung, at this time, investors should aim for medium and long-term investment, limit surfing investment, with a clear plan on cash flow, limit borrowing and always have a reserve for a period of time longer liquidity. Investors should also carefully study the project’s legality, because on the market today, there are many products that do not have a clear legal effect on the investment period. For home buyers, interest costs tend to increase, so the investor’s sales policies will be important factors to consider and choose.
Recently, Prime Minister Pham Minh Chinh has signed two consecutive Official Letters No. 1163 dated December 13, 2022 on the corporate bond market and Official Letter No. 1164 on removing difficulties for the real estate market and housing development.
According to experts, this is a positive signal for businesses, organizations and individuals operating in the real estate sector. This is an opportunity for real estate projects to solve capital flow problems and handle problems related to legal procedures; promote the rapid development of projects and contribute to restoring the excitement of the real estate market in the coming time.
Besides, currently in the process of amending the law related to real estate, some investors at this time are afraid to put down money. Therefore, according to experts, until the law is fixed, when everything is clear, the market will have the motivation to recover strongly.
Source: CafeF
Source: Vietnam Insider