[NEWS] - Vietnam real estate’s prices continue to increase, inversely proportional to liquidity

Right from the beginning of 2022, although the epidemic was still complicated, the real estate market was quite active in all regions, creating excitement for both businesses and investors. However, in the long term, the economy still faces the risk of crisis, inflation... and this is also one of the factors that will push real estate prices to continue to increase.

Data published by the General Statistics Office showed that core inflation in April 2022 increased by 0.44% over the previous month, up by 1.47% over the same period last year. On average, in the first four months of 2022, core inflation increased by 0.97% over the same period in 2021.

Experts also warn that in 2022, if inflation is high, more money may flow into real estate, but it will also deepen the "weakness" of the market, which is low liquidity. The story of real estate price increase inversely proportional to liquidity already exists.

Mr. Nguyen Van Dinh, Vice President of Vietnam Real Estate Association (VNREA) commented that the current transaction is low and is limited by the high price of real estate in many places. The asking price currently does not reflect the actual value. Meanwhile, investors or buyers can also calculate a fair value. Therefore, people with real needs will not choose products that have been overpriced. This leads to poor absorption throughout the market.

Image: Internet

Currently, the supply of real estate is very scarce. Facing this situation, many brokers and speculators continue to push up real estate prices, but many places offer prices that are too virtual so there are no buyers. People with real housing needs are looking for affordable areas, reputable investors. Therefore, projects that meet the price and legal criteria will still have good liquidity, Mr. Dinh analyzed.

Sharing the same opinion, Mr. Le Hoang Chau, Chairman of Ho Chi Minh City Real Estate Association also said that land prices higher than the actual value are not consistent with "laws of value, laws of competition, laws of supply- bridge." When land prices rise and are not in line with the realities of the real estate market, it can become a "double-edged sword" that both damages consumers and is detrimental to investors themselves.

About those projects, if they offer too high a house offer without being accepted by the market, will lead to "out of stock," increasing the inventory of real estate, Chau warned. Real estate prices increase rapidly, being blown to excessive levels will cause many consequences and distort the market, unstable and unsustainable.

Lessons left have been recorded through many waves of land fever. Although the land fever only took place in a short time, the consequences were huge. The price level is pushed to a high level, investors who put money down to participate in the price race will be stuck in cash flow due to illiquidity. And those who want to buy real housing can’t reach it because the price is far away.

Ms. Do Thu Hang, Senior Director of Consulting and Research Department of Savills Hanoi, pointed out that many investors are now "stuck" by buying land in hot flashes, while development Infrastructure and services have not kept pace. The high asking price of real estate, but not easy to sell, is making it difficult for project investors to sell in 2022. In fact, a number of adjacent projects, shophouses have offered a selling price that has nearly doubled compared to last year but it was not easy to find a buyer.

Another negative impact of inflation on the real estate market is that property holders will push prices up to reduce depreciation. When the whole market pushes up the selling price, it will cause real estate to establish a new ground. Projects formed in the future also calculate the selling price of 2-3 years after handing over the product because the investor includes the inflation part in the cost.

Therefore, in the next 12 months, it is forecasted that there will be a paradox of continuously escalating house prices but slow liquidity because everyone is racing to own properties, leading to social resources "burying" capital in real estate.

Cao Duy