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Will housing prices cool down in late 2022?

The boost in sales and the slowdown of the land bank expansion are expected to help  land and house prices decrease in the remaining quarters of 2022, according to VNDirect Research.

VNDirect Research has released a report about the real estate market, citing the statistics of CBRE as showing that the supply of new apartments in HCM City in Q1 decreased by 48 percent compared with the same period last year to 884 apartments, the lowest quarterly level since 2013. This caused the number of primary apartments sold in the quarter to fall by 53 percent to 1,247.

The average price of primary apartments increased by 7.7 percent in Q1 2022, lower than the increase of 14.6 percent in Q1 2021 and 6.9 percent in Q4 2021.

As for the land and housing market segment, the average prices of secondary products in some areas decreased by 5 percent in Q1. However, the prices in the remaining parts of the city – the northwestern part – tended to increase sharply.

In Hanoi, the report shows that the new supply of ready-built houses in Q1 also fell by 24.7 percent compared with the same period last year to 296 products. The consumption of primary apartments in Q1 increased by 16 percent to 4,800, while the new supply decreased by 20.3 percent to 3,525. The average price of primary apartments in the quarter saw an impressive increase of 13.3 percent to $1.655 per sq m.

As for the land and housing market segment, the secondary prices in 12 out of 15 districts in Hanoi saw the fall of 7.7 percent from the previous quarter, but still increased by 5.5 percent compared with the same period last year.

The report pointed out that the real estate sector is facing a lot of challenges, from the interest rate increase which affects people’s decisions to purchase houses; the building material price increases which may lead to the finish product price increases, to the tightening of banks lending to the real estate sector, and the stricter supervision over the corporate bond issuance.

The credit tightening and strict supervision over bond issuance will make it difficult for realtors to mobilize capital.

“Therefore, sales may be boosted in the time to come, while the expansion of the land bank will slow down, which would help reduce prices in the remaining quarters of 2022,” the report said.

Regarding risks, VNDirect Research warned of possible price increases, especially in suburbs. Meanwhile, the construction cost may increase in Q2. The steel price has increased by 20 percent over the same period last year, which would push house prices up, if the building material prices continue to be high in the next two years. High inflation and interest rates would also cause a negative impact on transactions of apartments, especially mid-end and affordable products.

The Government is going to issue a decree that amends and supplements six decrees that guide the implementation of the Land Law.

The new decree, together with Decree 148 released in 2020 and Circular 09 released in 2021, is hoped to help solve problems in approving residential quarter projects and shortening licensing procedures. Therefore, the market may become busy again after a gloomy period.

Real estate market too hot

Despite the Covid-19 pandemic, real estate prices have increased, while hot growth has been reported in many localities. 

Local authorities believe that  ‘land fever’ is caused by speculators, so they have asked the police to have an investigation to find out if there arerings that artificially caused the land price to increase.

At the Q1 regular press conference held by the Da Nang People’s Committee on April 18, To Van Hung, Director of the Da Nang Department of Natural Resources and the Environment, said the department has asked the city’s police to investigate the ‘land fever’ in Hoa Vang district. It may happen that real estate brokers, state officers and agencies collude with each other to push prices up.

Prior to that, Vinh Phuc People’s Committee signed Directive 10 on strengthening management over real estate trading in the province. Meanwhile, appropriate agencies in Gia Lai province also requested police to investigate land fever in the locality.

Thanh Son

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