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.