Monday , June 24 2024

Real estate prices continue to drop

Prices of land, apartments, townhouses and villas in Ho Chi Minh City and neighboring provinces in the secondary market have been on a downward trend as investors face cash flow issues.

According to VnExpress research by July 1, offering prices of apartments in the city’s eastern area decreased by some VND900 million (US$38,100), and townhouses and villas in its outskirts and nearby provinces by billions of dong.

Prices of some high-end apartments in the city’s District 1 even fell by VND5-10 billion. Meanwhile, prices of land in the outskirts declined by 30-50%.

Nguyen Loc Hanh, CEO of Asia Gem Real Estate Investment JSC, said the current decline in real estate prices in the secondary market was driven by two key factors.

One is the lack of cash flow of property owners who are individual investors. The other is the need for debt settlement of institutional investors.

Only when individual and institutional investors achieve financial balance, will they stop lowering property prices, he said.

For individual investors, the sell-off and decrease in property prices are mainly due to cash flow difficulties such as big amount of principal and high interest rates.

The market’s low liquidity makes holding many assets a burden, forcing them to sell off land or houses with little potential of profitability.

These individual investors will stop lowering prices when they manage to deal with cash flow problems with credit institutions, Hanh said.

According to him, institutional investors will stop the price reduction when they complete product and cash flow restructuring, and settle due debts with partners, banks and bondholders.

Chairman of a real estate company based in the city’s Binh Thanh District predicted the decline in housing prices would stop completely when the market showed clear signs of recovery from the middle of 2024 onwards.

According to the chairman, indicators of the market’s recovery include higher liquidity, much lower interest rates of loans for real estate, deposit interest rates falling below 6%, and the disappearance of weak property firms.

When the recovery signals appear, confidence of real estate buyers will gradually improve, but the chairman acknowledged that the confidence is currently low and it is difficult to have a breakthrough in the short term.

According to the chairman, when the market recovers, individual investors will stop reducing real estate prices, while institutional investors will start selling products at low prices in the early stages and slightly increase prices in the later stages of projects in the primary market.

Trang Bui, CEO of property consultancy Cushman & Wakefield Vietnam, predicted the market would grow and enter a new bullish cycle in the 2024-2026 period.

Meanwhile, infrastructure is receiving more investment, investors are increasingly diversifying their real estate portfolio, and interest rates are decreasing.

Trang forecast banks will continue to tighten credit, but a stricter and more prudent lending environment will create a safe and long-term investment climate that will support macroeconomic stability.

The above factors will gradually help the market overcome the quiet season and recover, she said, adding that as a result, many global investment organizations will participate in the Vietnamese real estate in the 2024 -2026 period.

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