Pressure from inflation is expected to increase real estate prices faster, market liquidity is heavily dependent on sales policies and financial support from developers.
Fear of real estate price surge due to inflation
Cash continued to flow into real estate amidst increasing fear of inflation. The upcoming Government's million-dollar economic recovery program in addition to rising prices of gasoline and raw material are signaling inflation. According to Dr. Tran Nguyen Minh Hai, Banking University of Ho Chi Minh City, "a dollar of tomorrow will not be worth the same amount of money today" due to global inflation. As a result, investors will have to withdraw money from banks that offer interest rates lower than the inflation rate and invest in safer channels than real estate.
Meanwhile, Dr. Su Ngoc Khuong, Senior Director of Savills Vietnam, said that when inflation occurs, the market will see a strong cash flow into real estate, which is known as a money safe. Real estate has a correlation with inflation, as inflation increases, real estate prices tend to increase, even increase sharply. If you buy a house for VND 1 billion, when inflation occurs, the price will increase to VND 1.2-1.5 billion. When inflation is high, the State Bank will make adjustments like increase interest rates. The higher the interest rate, the lower the buyer's ability to pay and the property liquidity.
Construction costs and inflationary pressure are expected to keep house prices high in the coming quarters.
Data from Savills Vietnam shows that the price of mid-end apartments in Ho Chi Minh City has reached VND 60 million per m2, an increase of 27% compared to the same period in 2021. Notably, there are a number of projects that have increased selling prices by 11% within 3 months. Batdongsan.vn’s market report January 2022 also shows that apartment prices in Hanoi and Ho Chi Minh City tend to increase by 1.8 to 4.4% compared to December 2021. The upward trend in house prices will continue amidst inflation and the constantly increasing construction costs.
Recent Report & Vietnamese Consumer Index published by Batdongsan.com.vn shows that 92% of Vietnamese have a desire to buy real estate in the future. 67% of buyers want to find real estate products in the primary market, but 55% of them admit that the current house price is beyond their financial capability and can only buy real estate with financial support and promotional sales policy from investors.
Expecting preferential sales from investors due to inflation pressure
Market reality proves that due to escalating project development costs, it is almost possible for investors to consider reducing or maintaining the existing price. Therefore, to increase liquidity, most recently launched projects have preferential sales policies for buyers. Many investors are following this path as inflation imposes pressure on the general financial situation.
For example, An Gia recently launched the large size Grand-Well apartments in Westgate project (Binh Chanh) with a flexible payment policy. Buyers only need to prepare 15% of the price (equivalent to VND 699 million) and pay another 15% in 2023 when they receive the house. The remaining amount can be put on a bank loan until the house is received with two interest-free years. Thus, with a low initial payment, customers can easily own apartments with more bedrooms or buy multiple apartments at the same time for investment purposes. Calculating the average price increase of apartments in Ho Chi Minh City (currently 10 - 30%), by the time of receiving the house, customers can earn a profit of 30 - 100%.
Home buyers expect more policies to reduce financial pressure when trading real estate from businesses.
At Akari City, Nam Long has recently organized a groundbreaking ceremony for Flora luxury apartment complex phase 2 with a starting price range of approximately VND 2.7 billion. To support young households financially, the investor has rolled out a policy of deferred payment within 30 months, supported by affiliated banks with discounted interest. With the above supporting program, buyers with a budget of VND 1 billion can still buy their own dream home. Flora Akari apartment complex is 8.4 hectare large in size with 4 blocks of 5,500 properties, located on Vo Van Kiet axis, district Binh Tan. This iconic project on Vo Van Kiet Boulevard is a very good living location thanks to the thriving infrastructure and facilities nearby such as the 18,000-m2 inter-level schools , the 2,500-m2 square, connecting the 42m commercial avenue axis.
A series of other projects being opened for sale such as Bcons Sala, Phu Dong Sky Garden, MT Eastmark City, Moonlight Center Point also launched flexible payment and preferential loan programs to reduce financial pressure for buyers.
Ngo Quang Phuc, General Director of Phu Dong Group, said split payment programs will be a solution to help buyers optimize profits and reduce financial burden. The ongoing pandemic has a broad impact on the real estate market, but segments targeting real buyers, affordable costs, and flexible investment solutions will still be at high demand.
Real estate expert Tran Khanh Quang said that as the housing market is facing inflation pressure, investors repositioning products by offering preferential policies, qualified products is a great opportunity for buyers. If there is an opportunity, buyers should buy apartments in projects with good prices, reputable investors, good management...
Source: batdongsan.com.vn