Global housing fever: a warning for Vietnam

Vietnam's estate market has grown strongly in recent years, and will still be an attractive investment channel for domestic and foreign investors.

Global housing fever: a warning for Vietnam

Less than a day after signing a deal with a customer for a 3-bedroom house in Sacramento, California, Andrea White, a real estate agent in the US, got an attractive offer from another customer.

They were willing to pay up to 520,000 USD, which was 21,000 USD higher than the offering price and 37% higher than the price of two years ago. The housing prices in all regions of the United States have increased by double digits year-on-year, according to Zillow's statistics.

Not only in the US, global housing prices have also been on the rise. The first months of 2021 recorded a positive recovery with an average price growth of 3.9%.

According to Savills' survey on the housing market recovery in 30 cities in the world, from mid-2018 to the end of 2020, the housing market in these cities slightly increased by 0.7%, largely due to social unrest, changes in policy and tariffs in many countries and subsequently the Covid-19 pandemic.

However, in the first half of 2021, the high-end real estate market in many countries showed a recovery, with the average price growth of 3.9%, the fastest rate since December 2016.

In the first half of 2021, more than 70% of the cities in the survey recorded growth in residential property values. The cities that witnessed negative growth are those that were previously largely dependent on demand from international customers.

In the US, Los Angeles and Miami took the lead with a growth rate of over 9% in the first half of 2021, thanks to the advantage of large area as well as favorable weather.

In Asia, China saw a clear growth in residential real estate prices in 2021, despite tightened financial regulations and many changes in policy of provinces and cities to cool down the market. The growth in Guangzhou was recorded at 7.9%, while it was up to 13.7% in Shanghai.

Several cities such as Singapore, Bangkok and Kuala Lumpur also recorded price growth recently, largely due to increased demand but limited supply.

In Hong Kong, residential property prices declined during the time from 2019 to the first half of 2020 due to uncertainties in the social situation. This market started to show signs of recovery with an increase of 1.9% in the first 6 months of 2021, thanks to low interest rates and the reopening of tourism activities.

In Europe, property values in London were stable in 2020 and increased by 1.1% in the first half of 2021. Meanwhile, the Paris housing market recorded a decline in prices and a decrease in the number of transactions compared to the previous year. The main reason was the prolonged lockdown, thereby negatively affecting the confidence of buyers in this market.

Real estate assets 4 times more than global GDP

As the world's most important store of wealth, global real estate values exceed the combined value of stocks and bonds, and nearly four times higher than the global GDP. The value of all gold mines today is around 12.1 trillion USD, equivalent to just 4% of global real estate value.

The value of all types of real estate worldwide hit a record high of 326.5 trillion USD in 2020, up 5% from 2019. This growth was driven by housing estate, which is the largest estate segment, equivalent to 79% of the total global real estate value. The value of residential real estate increased by 8% to 258.5 trillion USD in the past year.

 

Not only recording a growth in price, the number of transactions in many cities also rose highly, especially in comparison with the same period in 2020.

Positive factors for the market consist of low interest rates, improvement in buyer confidence, and an increase in the number of high-value transactions and economic stimulus measures. As many countries are gradually opening their borders, the market can expect greater demand.

Uncertainties due to the Covid-19 epidemic may still persist, but signs of economic recovery will increase investor confidence, thereby boosting real estate demand from now until the end of the year.

Signals for a fever in Vietnam

Global housing fever: a warning for Vietnam

Vietnam's real estate market has been getting hot. According to surveys by real estate consulting firms, Covid-19 has brought many economic activities to a halt, but residential real estate in Vietnam is still one of the fastest growing markets in Southeast Asia.

For 10 consecutive quarters, the apartment market in Hanoi recorded an increase in prices, with about 14%/year since 2017 Hanoi’s Cau Giay District. In Ho Chi Minh City, the price increased by 15-20% in District 7, District 9 and Nha Be.

The estate market has grown strongly in recent years, and will still be an attractive investment channel for domestic and foreign investors. With favorable factors such as political stability, a positive forecast for the economy, increasing foreign investment capital, a large population and increasing purchasing power, and the signing of many Free Trade Agreements, Vietnam's real estate market is expected to have a lot of room for development.

According to real estate experts, in the long run, house prices in big cities will continue to increase due to many factors.

In the central areas, new projects are increasingly scarce, while the demand for housing is on the rise. Vietnam’s current urbanization rate is only about 35%, and about 49% in Hanoi, quite low compared to the region and the world. With the low urbanization rate, migrants from provinces to Hanoi will increase, while housing is a need of everyone.

Real estate experts said that the land fund has not changed, so it is difficult for housing prices to be adjusted down. In addition, input costs of housing projects also have increased from the price of land, construction materials to labor... to push housing prices up. When demand is increasing and the supply is limited, house prices in central areas or places with convenient transportation, health care and other utilities will rise.

Matthew Powell, Director of Savills Hanoi, said that commercial real estate, industrial real estate and retail estate will also develop. The supply of commercial real estate in Hanoi in relation to other cities in the world is still quite limited. Demand for industrial real estate has also increased rapidly in recent years with many new types such as data center, logistics center or industrial cold storage estate.

Duy Anh

Realtors spend trillions of dong to buy land during pandemic

Realtors spend trillions of dong to buy land during pandemic

Realtors with strong financial capability are collecting land for large projects in the future.

Real estate market waits for amended Investment Law

Real estate market waits for amended Investment Law

The amended 2020 Investment Law is expected to expand housing supply.  

 
 

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