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People rush to buy property, fearing high inflation

Concerns about high inflation are causing many people to buy properties to hoard.

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Observers say now is the time for realtors, who are suffering from market doldrums due to Covid-19, to boost sales. People are rushing to buy real estate as they have heard about a possible rise in the inflation rate this year and next year.

Nguyen Quoc Bao, Chair of Vietnam Real Estate Club, said that those who buy houses now will make a considerable profit in the future when they sell the houses. Experienced investors have long-term vision. They invest in real estate, considering this a safe and sustainably profitable investment channel. Moreover, high demand is also a reason why people are using idle money to buy real estate.

“Real estate prices go up and down all the time, but the selling price is never lower than the buying price. In many cases, investors can pocket very high profits,” he said.

Tran Khanh Quang, CEO of Viet An Hoa Real Estate, noticed that developers, when putting their projects on sale, have adjusted the selling prices and made them closer to real value. If they can take full advantage of the market, they can attract more clients to new projects and create more transactions.

The prices of some projects that had already been for sale have been adjusted with price discounts and preferences offered.

The tendency of lowering real estate prices to make them closer to real value began in the fourth quarter, when a series of real estate projects were marketed with attractive discounts after the lockdown period.

At a project in Can Giuoc district in Long An province, which faces Highway No 50, just 20 kilometers from HCM City center, each apartment is selling from VND2.9 billion. The developer is offering price discounts of 4-12 percent. Meanwhile, banks provide loans worth up to 70 percent of apartments’ value and customers just have to pay 20 percent, or VND600 million, until they receive the apartment.

People who sign contracts to buy apartments at a project in Di An City in Binh Duong province in December 2021 only have to pay 30 percent of apartments’ value, or VND400 million. They can get a loan from a bank worth up to 65 percent of the apartments’ value and receive support from developers in paying interest rate during the construction time until they receive apartments.

Under the method, loans worth 65 percent of apartment value would be disbursed twice. The first time, the bank disburses 40 percent of the value of the apartments from the time of contract signing to the day buyers receive the notice about apartment delivery. The remaining 25 percent will be disbursed the next time. The money from both the first and second disbursement will receive interest rate support from the time of disbursement to the time of the notice release, plus six months.

Meanwhile, a developer in Ho Tram is running a program under which buyers just have to pay 20 percent of value of the apartments until they receive apartments, and it promises profits of 6.5 percent at minimum. After the committed period, the developer promised profits of up to 90 percent. Those who make payments early will enjoy price discounts of 2-7 percent. 

 

The tendency of lowering real estate prices to make them closer to real value began in the fourth quarter, when a series of real estate projects were marketed with attractive discounts after the lockdown period.

 

New trend

The real estate market is warming up as the pandemic has been controlled. Hanoi, HCM City and other provinces have step by step loosened and removed social distancing.

Tran Khanh Quang, a real estate expert, predicted that new satellite urban areas will appear in the time to come. More people are moving away from large cities like HCM City due to the pandemic, while businesses are relocating their factories and production workshops to the suburbs instead of setting up production bases in large cities. Quang said real estate in suburbs will continue increasing in price in the next few years.

After Covid-19 is controlled, the market will gradually recover. At that time, in addition to real estate as savings, people will also buy real estate at isolated housing areas. Land and second homes will be two hot market segments.

Nguyen Loc Hanh, CEO of the Asia Commercial Bank (ACB), predicted that the market will see a mild fever at the end of year, and a growing tendency of real estate purchases in suburbs.

In HCM City, the supply has been low over the last two years with very few products marketed because of legal problems.

Hanh believes that 2022 will see a public investment boom. The disbursement for infrastructure projects will have to be quicker to help economic recovery post-pandemic. Once infrastructure items are built, this will facilitate the development of the real estate market.

However, he warned that higher public investment may lead to high inflation. If so, injecting money into real estate would be a good solution to protect assets. 

Hai Nam

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