Should I buy a house now or wait until next year?

Question from reader Nguyen Dong:

I live and work in Ho Chi Minh City and currently have a savings of VND2 billion ($82,321), with a monthly income of VND30 million. I am planning to buy an apartment near District 7 and have been searching for ones whose prices have reduced since the beginning of the year.

Despite the market encountering difficulties, I have noticed little decline in housing prices. Now that it is the end of the year, I am unsure whether to borrow an additional VND1 billion from the bank to buy a house before the Lunar New Year (Tet) holiday, which falls in February 2024, or to wait until the new year in hopes of cheaper prices. Many people advise me to buy quickly as the real estate market after Tet is unlikely to see significant price reductions.

I hope an expert can advise me on this situation!

Advice from Nguyen Kim Dung, Real Estate Specialist, FIDT Investment Consulting and Asset Management Joint Stock Company:

The year end often brings financial and psychological changes to the public. Many people tend to look for houses with the mindset of ‘buying land at the beginning of the year, buying a house at the end of the year.

“This period is suitable for searching and surveying to ‘buy a house to celebrate Tet in.”

Many have extra financial resources from year-end salaries, Tet bonuses, and performance rewards, leading them to consider purchasing a house at this time to establish a home for their family and enjoy a more wholesome Tet.

Additionally, many believe the end of the year is a golden time for house purchases, as prices are generally lower than the rest of the year.

This is often due to homeowners needing to urgently sell their assets to prepare for their new year’s plans or for fear that the market will slow down after Tet, meaning buying/selling activities or administrative processes will be slower. Thus, buyers have more choices and can more easily find a house suitable to their needs and financial capabilities.

For housing projects, developers often offer promotional programs and attractive deals at year-end to help stimulate the real estate market and increase the demand for home purchases.

The end of the year is also when banks typically offer more favorable interest rates and loan procedures for homebuyers so they can borrow with lower interest rates, reducing financial pressure.

However, there are certain advantages for those buying homes at the beginning of the year, particularly after Tet. Buyers will have more time to choose and manage finances without being rushed, which can impact their decisions.

Each period has its pros and cons, and sometimes the decision to invest might be influenced by personal emotions. It is important to do thorough research before buying a house to avoid legal and planning risks.

Also, careful valuation of the property when purchasing is crucial to avoid ‘buying in haste’ at prices much higher than its market and actual value.

Regarding borrowing for a house purchase, without enough information about your financial situation, I cannot say whether borrowing VND1 billion to buy an apartment is the right choice for you. Generally, when borrowing, you should consider loan interest, loan terms, income stability, and how much of your monthly income is used for bank payments.

A maximum of 30% of total income or up to 70% of your monthly savings is a safe threshold. Also, consider having contingency plans, like insurance and emergency funds, for income-related risks.

Finally, the real estate market will face ongoing challenges in the long term. I believe the market will begin to recover from Q3/2024. Therefore, if you are not under pressure of immediate housing need or if your apartment purchase is for investment, you can wait until the market shows real signs of recovery before deciding.

*The question and answer were translated into English by AI.