Ho Chi Minh CityAccording to experts, the tightening of real estate credit, legal rules, and high selling prices are causing the market to stand before the purge at the end of 2022.
Share with VnExpressLe Huu Nghia, Director of Le Thanh Company, predicts that from now until the end of 2022, the real estate market in Ho Chi Minh City will have a strong purification. The reason is that the ability to sell is more difficult, the credit squeeze affects buyers and investors more and more clearly. Meanwhile, housing prices were pushed up too high, making it inaccessible to consumers, and investors and speculators were also hit.
According to Mr. Nghia, there are two possible scenarios of market purification in the last 6 months of the year. In the first scenario, the capital market enterprise, which has a lot of potential in terms of land bank and diversified products, still survives. Weak businesses, doing snatching business are eliminated due to insufficient financial resources, blocked or little supply, difficult to sell. If this scenario happens, the screening is a good signal to help the market eliminate weak factors and move towards the goal of sustainable development.
In the second scenario, credit barriers and legal obstacles lead to project stagnation, high prices, and weak liquidity; causing many businesses to die in mass, only businesses in the interest group survived because of the policy loopholes. If this scenario occurs, this screening process is very worrying because it is detrimental to the real estate market and the economy. The real estate market could enter an extended cycle of trouble.
Mr. Nghia further forecasted that the rate of house price growth in recent years was too fast, but mainly speculators benefited, the income of people with real needs has not caught up with the rate of housing price growth, leading to opportunities. settlement is increasingly out of reach. In fact, the vast majority of people’s assets are either houses or real estate, leading to rare cases of asset price decline in the context of high inflation.
According to Le Thanh Company’s assessment, on a general level, real estate prices including: land, houses and assets attached to land are difficult to adjust down because all property holders do not actively lower them. price. With special cases (financial distress, need for money, pressure to pay interest on loans), it is possible to sell goods at a lower price than the common ground, averaging 10% or more. “The common feature of the real estate market over the past half-decade is that the price increase has taken place quickly, but the rate of price decrease has been quite slow,” Mr. Nghia commented.
Also concerned about the upcoming market purification, the Deputy General Director of a real estate company in the South of Ho Chi Minh City assessed that 2022 will be a challenging year for all market participants. Towards the end of the year, the difficulty level will gradually increase. Therefore, according to him, the process of market purification will take place in the most oppressive period, from the third quarter onwards.
He cited the fact that in the past 6-18 months, many businesses have not been able to produce products due to legal rules, leading to difficulties in supply and cash flow. 4-5 years ago, ie consuming reserve resources. Brokerage businesses face the common difficulty of having no goods to sell, debt fees, and being forced to reduce personnel.
From April until now, the credit squeeze making it difficult to get loans has blocked a large number of market participants, plus the high selling price is also a huge barrier to the product consumption process. “Businesses need a sound defense strategy to get through the harsh screening period later this year,” he said.
Ms. Vo Thi Khanh Trang, deputy director of Savills Vietnam Research, also acknowledged that the credit squeeze could lead to a period of cleansing of the real estate market.
According to her, this purification process will help the market develop more sustainably and healthier. Only real investors with financial resources and sustainable development can survive. Meanwhile, investors who depend on loans and do not have a sustainable development process will face many difficulties.
In terms of homebuyers, Ms. Trang said, tightening credit can reduce the group of speculative, surfing and non-residential buyers, thereby helping home buyers with real needs get closer to the real estate market. more home owners.
Investors have to face the cost of land use and raw material prices continue to increase. This is also a difficulty for the investor and affects the final selling price of the product. “Therefore, the affordable or social housing segment is still a door for investors to participate and contribute to the development of society,” recommended Ms. Trang.
In addition, Savills also recommends that businesses need to actively diversify capital sources, access alternative channels such as investment funds, mergers and acquisitions (M&A), joint ventures in the context of real estate credit. tightened. Diversifying capital sources will help stabilize the market and reduce systemic risks.