As a real estate broker and distributor of a project in Bac Ninh province, Tung has to go back and forth between Hanoi and Bac Ninh during the day. He complains that business is bad. The semi-detached villas which his company distributes cannot find buyers. 

“The market has cooled, and there are few buyers,” he said. “I am thinking about giving up the job as I am running out of money. I will try to work one more month to see if there is any improvement."

The major income of Tung, like other real estate brokers, comes from commissions from sales, while the fixed monthly salary the company pays is very modest, just VND3 million.

Asked about why the real estate market is quiet, Tung said real estate prices have been pushed up too high. The villas of the project that Tung’s company is distributing, for example, have prices of VND10 billion each. 

Most buyers are investors who buy villas for investment and business purposes. When the prices become too high and lending is tightened, they stop buying and sales become weak.

“More housing products have been launched into the market recently. However, sales are slow because of high prices,” he said.

Do Thanh Hai from a real estate trading floor in Hung Yen noted that investors have become very cautious. Many investors sell real estate products, accept modest profits, and leave the market.

The banks’ tightening of real estate credit has also dealt a strong blow to the real estate market.

According to Hai, in general, buyers have to borrow 20-30 percent of the value of real estate products. After hearing that banks had tightened lending to the real estate sector, clients became very cautious about spending money.

Nguyen Quoc Anh, deputy CEO of a real estate analysis firm, noted that while land and house prices have increased, sales have not increased proportionally. Sales depend on many factors and when the prices are too high, the purchasing power becomes lower.

In Hung Yen, low-rise houses are being sold at VND120-194 million per sq m. In Quang Ninh, the price is VND125-175 million per sq m and in Hai Phong, the figure is VND41-57 million.

According to real estate experts, after a period of strong price increases, the real estate market is entering a correction phase. 

Matthew Powell from Savills Hanoi said that price increases and high inflation rate, and the credit tightening, may cause the real estate market to slow down in the short term.

Duy Anh