The Vietnamese property market is expected to slow down, with prices starting to drop by the end of this year and hitting the bottom by mid-2021, creating opportunities for home buyers sitting on cash, experts have forecast.
Viet An Hoa Real Estate Investment JSC director-general Tran Khanh Quang said: “Housing prices will begin to plummet by the end of this year and bottom out by mid-2021 when the [Covid-19] pandemic has impacted almost every sector, especially the housing market.”
Since the second wave of the pandemic began late last month, investors’ confidence has once again weakened as property sales dived and incomes were hit hard.
Quang said: “Investors have to wait and observe the market . . . The financial market has faced fluctuations since the beginning of the year when the outbreak started.
“A large amount of long-term cash flow is still waiting for good prices to buy . . . from the end of the year to the first half of 2021 will be an opportunity for home buyers. The most affected segment is the higher end.”
Experts said the most valuable assets in or near the central area are expected to be hit hardest.
Tourism real estate, restaurants and hotels and resorts at tourist hotspots, especially along the coast such as Phu Quoc, Nha Trang and Danang, are expected to be the worst affected.
Buyers are waiting for prices to drop further, hopefully by 15-20 per cent, to buy, experts said.
Phu Vinh Group director-general Phan Cong Chanh said investors who had bought property at peak prices (before the pandemic) are now struggling to repay bank loans while they find it extremely hard to sell their property now.
With the real estate market remaining uncertain in the first half and probably continuing to be so for the rest of the year the commercial housing segment in Ho Chi Minh City faces a slump, said Savills Vietnam, the local unit of the UK-based real estate services provider.
The outbreak has forced people to tighten their purse strings due to loss of income, which would also affect housing demand.
Housing development has also been facing a prolonged legal and licensing barrier, hitting buyers’ confidence.
The resurgence of Covid-19 caused the online real estate market to slow down by seven per cent last month as measured by users’ likes and number of searches, popular property website Batdongsan reported.
The amount of news posted and the level of interest in the market has seen a decrease since late last month due to the return of the deadly virus, it said.
Interest levels in online real estate floors in provinces recorded an average drop of 10 per cent.
The website’s internet consumer research data also show that in Danang, the new disease epicentre, it dropped by 20 per cent, the highest rate in the country.
Opportunities for buyers
Once borrowers cannot afford to repay loans, the likelihood is that banks will begin to sell their collateral, which is expected to happen in the next six to 12 months.
Nguyen Khanh Duy, director of housing business at Savills, said: “This is a golden opportunity for both home buyers and investors to buy.”
In the first half of the year, Savills Vietnam said, the supply of condos in the primary market decreased by more than 9,100 units, or 52 per cent year-on-year, to the lowest level in the last five years.
The supply of land lots plummeted by 53 per cent and that of villas and townhouses, by 23 per cent. Sales of land declined by 67 per cent.
The number of condo transactions in the first half dropped by 55 per cent to just 6,800 units, again the lowest in the last five years. The number of transactions for villas and townhouses decreased by 34 per cent.
Duy said that when the market gets gloomy, most developers tend to be cautious due to uncertainty.
“Buyers are now hesitant to buy while sellers are being urged to sell out due to losses.”
“This is also a good time for acquisition of real estate projects across the country, especially in major cities like Ho Chi Minh City,” he said.
Affordable segment preferred
Ho Chi Minh City Real Estate Association (HoREA) chairman Le Hoang Chau said the market would continue to have high demand for affordable apartments while the supply in this segment is limited.
“There is need for more investment in the affordable housing segment. This segment has high demand and also high liquidity,” Chau said.
Nguyen Duc Them, project sales manager at Savills Vietnam, said demand from foreigners was also increasing.
Foreigners now own around 16,000 apartments, or two per cent of the total supply, and this has not affected locals’ opportunity to buy housing, HoREA reported.
Since 2015, big-name developers have sold 12,335 units to foreigners, 81 per cent of them in Ho Chi Minh City.
Most people coming from Europe, North America, Australia and Japan prefer to rent when they come to work in Vietnam, while those from mainland China, South Korea, Taiwan, Hong Kong and Singapore prefer buying, it added.
VIET NAM NEWS/ASIA NEWS NETWORK
