Will the real estate market have a new cycle of price increases?

Minh Hoàng
April 27, 2021

The real estate market will have a new cycle of price increases, lasting from 2021 – 2023, predicted Mr. Nguyen Manh Ha, Chairman of Landora Group.

According to the Ministry of Construction, the bank credit for real estate loans, according to statistics, still grew in the fourth quarter of 2020, showing that the market was still growing and there was no other sudden movement of investment capital flows.

– In the past year, the State Bank has submitted a written proposal to delay the roadmap to apply the maximum rate of short-term capital for medium and long-term loans as prescribed in the draft Circular amending and supplementing Circular 22 /. 2019 / TT- The State Bank on limits and prudential ratios in the bank’s operations. In fact, the demand for credit in general declined due to the COVID-19 epidemic, but real estate credit kept its growth.

LOWEST INTEREST RATE IN 10 YEARS

– From the end of 2020, many banks have started to lower lending rates for home loans. At VPBank (from 5.9% / year for the first 3 months, 7.9% / year for the first 6 months or 8.9% / year for the first 12 months); BIDV (from 7.6% / year in the first 12 months or 9.2% / year for the first 36 months); Vietcombank (from 6.79% / year, fixed in the first 6 or 12 months); even, the home loan interest rate at OCB has dropped below 5% / year (the home loan interest rate of 4.99% / year is applied by OCB in the first 3 months for customers with loans from 48 months or more; in other cases, the interest rate is 7.99% / year in the first 6 months). In general, compared to the end of 2019, the first year fixed-home loan interest rate was lower and according to banking experts, the current time tends to decrease to the lowest area of ​​10 years. .

– Up to now, lending interest rates as well as bank deposit rates still tend to decrease. Accordingly, many units believe that home loan interest rates will also continue to be low in 2021. According to statistics of VNDirect Securities Company, since the COVID-19 epidemic broke out in January 2020, the Bank The State has three times cut operating rates (in March, May and October 2020) to help the economy pick up itself. This, according to an analysis by VNDirect, has helped reduce the pressure on provision expenses for banks and reduce interest expenses for customers. Therefore, banks have introduced stimulus packages such as interest exemption / reduction and lending interest rate reduction to reverse low capital demand of home buyers due to the impact of the epidemic and the lack of housing supply.

– As of November 2020, the home loan interest rate adjusted by domestic banks fell 1.8 percentage points to 9.5%, the lowest level in 10 years. In the context of cooling inflation pressure, we expect the State Bank of Vietnam to maintain adaptive monetary policies in 2021.

– “Although we do not expect the State Bank to further reduce the operating rate, we do not expect the State Bank to increase further in 2021 with the aim of continuing to support the economy by maintaining the policy. Loosening monetary policy. Accordingly, we believe that home loan interest rates will continue to remain low in 2021 to stimulate demand for real estate, “VNDirect stated.

THE LOWER INTEREST RATE, THE MORE POSSIBLE INVESTMENT

– “Home loan interest rates have a significant stimulus effect not only for buyers to serve real needs but also to investors,” said Nguyen Van Dinh, Secretary General of the Real Estate Brokerage Association. Because, when interest rates are high, many real estate investors dare not use credit leverage, but lower interest rates stimulate this group. Besides, when the deposit interest rates decrease, people will also limit deposits in banks and promote investment in other areas, in which, the first choice is still investing in real estate. This contributes to promoting the liquidity of the real estate market.

– And Mr. Nguyen Manh Ha, Chairman of Landora Group predicted, the real estate market will have a new cycle of price increases, lasting from 2021 – 2023. The reason is due to 3 basic factors.

– First, in the current period, the real estate market has two large capital sources, resonating in the market as domestic investment and foreign investment. Vietnam is becoming a new destination with a special attraction for international investment. The wave of factory relocation from China is making Vietnam become the destination of foreign investment inflows.

– Secondly, after the last Covid-19 season, when investors had time to “rest” and enjoy their life, they realized that they could not “sit and play” forever, but had to do something to take advantage of investment opportunities in the market.

– Third, domestic real estate investors have had a long period of financial accumulation and continuous experience in 6 years of strong market development. Meanwhile, the bank deposit interest rates are currently very low. Economic growth is about 3%, but interest rates for medium and long term deposits are only about 2.5%. Thus, it is clear that investors leaving money in the bank are “losing money”. At the present time, “the people have”, the money in the population is very plentiful, leading to a great investment demand. Consequently, the investment demand is very high.

STILL POTENTIAL RISK?

– Experts also said that reducing interest rates, increasing real estate investment demand means promoting real estate credit balance. Statistics of the Credit Department, State Bank of Vietnam show that, in the first quarter of 2020, real estate credit balance decreased compared to the end of 2019, mainly because this was the time when COVID 19 was complicated. Best.

– However, by the second quarter of 2020, the real estate credit balance of businesses increased significantly, the real estate market began to have more improvement in transactions. Credit outstanding balance for real estate investment and trading activities increases gradually in each quarter: in the third quarter of 2020, it increases by 4.3% compared to quarter II / 2020, quarter IV / 2020 increases by 4.53% compared to that of with the third quarter of 2020. This reflects a more stable growth in outstanding loans in the third and fourth quarter of 2020. “In addition to the main source of capital for the real estate market is bank credit, the real estate market in 2020 will still attract other sources of capital such as personal investment capital, remittances and capital. from issuing stocks and bonds of listed companies and FDI “, the Ministry of Construction said.

– Also discussing this, the Ho Chi Minh City Real Estate Association acknowledged that the total credit balance in the city by 2020 would reach about VND 2.48 million, an increase of about 8% compared to the end of 2019. In which, the credit balance of real estate groups and businesses is estimated at about 293,750 billion VND, accounting for about 13% of the total outstanding credit and increasing by 5.9% compared to the end of 2019. Real estate businesses accounted for 2.7% of total real estate loans, higher than the 2.25% NPL ratio of total outstanding credit. Although it is still in the safe range, there are potential risks when it comes to maturity.

– Of concern is that out of the VND293,750 billion of consumer credit outstanding, about 42% is used for real estate-related purposes, especially for real estate business, potentially risky. credit safety for these loans.

– In addition, the proportion of medium and long-term credit is higher than short-term credit, showing that investment projects are of medium and long-term nature, of which, mainly real estate projects are still dependent and still relying mainly on Bank credit and customer deposits, medium and long term capital mobilization channels from the stock market, the bond market, real estate investment funds, and trust investment funds. Real estate (REITS) has not been fully developed to meet the capital needs of the market.

– According to Mr. Le Hoang Chau, Chairman of Ho Chi Minh City Real Estate Association, this is very worrying, because there is a possibility that some real estate credit loans are at risk of turning into bad debts and the market. The real estate development is not stable and sustainable.

Source: vneconomy.vn

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