Investors stop cutting losses, waiting for prices to increase

"Turn around" waiting for price increase

Ms. Thuy (investor) advertised for sale a 42m2 townhouse in Go Vap District (HCMC) that is being rented out, but has not been able to sell because the price offered is not as expected. Now, Ms. Thuy has decided to stop advertising for sale, waiting for the market to improve. "I have rented this house for a long time, the current rental price is also low, so I plan to sell it to get money to do other things, not to sell at a loss at all costs. Therefore, I decided not to sell it anymore, waiting for the price to stabilize before deciding to continue," Ms. Thuy shared.

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"In case investors accept to "hold" real estate, they need to be mentally prepared and have to wait for another 6 months before liquidity can return. If the investor's financial foundation cannot last until then, they should accept to sell part of it."
Mr. Ngo Quang Phuc - General Director of Phu Dong Group

Mr. Thanh Tuan (investor) owns a 500m2 plot of land in Cu Chi district, Ho Chi Minh City. He bought this plot of land in early 2021 for 2.2 billion VND and had to borrow 1 billion VND from the bank. By mid-2022, the real estate market fell into difficulty; his business also saw a decline in income. Therefore, Mr. Tuan had to sell the land, but after cutting a loss of 200 million VND, he still could not find a buyer.

Currently, seeing that the market is doing well, Mr. Tuan decided to stop selling, wait for the price to recover and increase slightly, then sell later. According to Mr. Tuan, another positive signal that he is observing and waiting for is that at the end of the year, many real estate businesses will launch products, and at the same time, many infrastructure projects are also being implemented. Mr. Tuan hopes that these things will help "heat up" the market, increasing transactions.

Mr. Long (a real estate broker in Thu Duc City, Ho Chi Minh City) said: "At this time, many customers who sent me real estate products for me to sell have told me to stop selling. Some customers have even started to increase prices again. If they can get the money and are no longer under too much pressure to pay off their debts, they will stop selling during the bad market situation."

According to Mr. Long, recently, many investors want to sell their real estate quickly when they need money to pay off debts or are worried about the bad market and the price of the product continuing to decline, so they want to liquidate immediately. However, when the real estate market is quiet, the sale is forced by customers, making the landowner uncomfortable, not to mention being forced to sell continuously, many landowners will refuse to sell. Therefore, when the market shows good signs and it is determined that they can continue to pay back the principal and interest, investors will wait, instead of cutting losses or selling at a loss.

Many positive signals

According to economic experts, recently, the real estate market in the Southern region has shown many positive signs, so many investors are no longer cutting losses or deeply reducing prices. Part of the reason is that investors can access bank capital with preferential interest rates. For investors who are bearing high interest rates, they can switch to borrowing from other banks with lower interest rates. These things have significantly reduced the pressure on investors. This is also the reason why landlords can cope with additional debt, the real estate market is also showing signs of recovery, so they expect prices to increase soon to get rid of their goods.

The market shows signs of recovery, many investors decide to hold on to their stocks and wait for prices to increase.

A report from DKRA Group shows that in November 2022, the wave of selling land and individual houses at a loss has cooled down somewhat, and deep price reductions of 30-35% are no longer common. Primary prices of land and townhouses in Ho Chi Minh City and neighboring provinces recorded an average decrease of 3-10% compared to the same period in 2022, and only decreased in high-value products with incomplete infrastructure and legal documents. In the secondary market, prices and transactions maintained a sideways trend.

According to data from the Dat Xanh Services Institute of Economic - Financial - Real Estate Research, in November 2023, the secondary market recorded moderate transactions, with no changes in selling prices; the apartment and townhouse segment no longer saw price decreases in secondary transactions but remained mostly stable, even increasing slightly by 2-3% in some projects with good locations.

Mr. Ho Van Thanh - Director of a Real Estate Trading Floor in Ho Chi Minh City said that recently there has been a phenomenon of some landowners and homeowners "turning around" waiting for a price increase. When the market shows signs of recovery, investors also wait to sell at a price close to the market. Therefore, many homeowners "turn around" not selling at the previous price, to sell at a better price or not selling anymore because they have managed to manage their cash flow.

Mr. Le Hoang Chau - Chairman of the Ho Chi Minh City Real Estate Association (HoREA) said that the State's macroeconomic policies, including very favorable interest rates, create conditions for people to access capital. Therefore, many homeowners no longer sell at a loss, but consider offering better prices when they have managed to manage cash flow. Currently, the real estate market in the South in general and Ho Chi Minh City in particular has only partially overcome difficulties, which means that there are still many difficulties that need to be resolved in order to fully recover.

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