Efforts to 'rescue' the real estate market - Part 2: Investors rush to sell real estate to cut losses

Since the beginning of the year, Ho Chi Minh City and the southern provinces have been flooded with information about real estate sales to withdraw capital and cut losses. The reason for this situation is due to the increase in lending interest rates, while most investors use financial leverage, and the frozen market causes business losses.

Land projects, villas, apartments... are being advertised for urgent sale in Ho Chi Minh City.

Accepting to sell at a loss According to the reporter's records, there is currently a lot of information about urgent real estate sales at low prices such as "selling at a loss due to lack of money", "selling real estate at a loss", "selling at a loss urgently", "bank debt urgently for sale" ... appearing continuously on real estate pages, social networking sites, real estate brokerage groups. According to real estate experts, from mid to late 2022, the real estate market in Ho Chi Minh City will face many difficulties when liquidity slows down, banks increase loan interest rates, many real estate investors fall into a "crisis" and have to find money to rotate capital, pay debts and interest ... Some investors are forced to reduce real estate prices to sell early to cut losses. Ms. Ho Minh Giang, residing in Binh Duong, said: "I bought the Bescon project in Binh Duong in 2021. At first, I still paid on schedule, but from the beginning of 2023, the economy is difficult, I am worried that I will not have enough money to continue paying. Recently, the investor called to sign the sales contract, but I am asking to stop paying and sell a 1-bedroom apartment of 50 m2 at a loss. The original price I bought was more than 1.57 billion, now I am only selling it for 1.50 billion to cut the loss because I cannot afford it." Also falling into the above situation, Mr. Do Van Hung, residing in Go Vap district, said that he and his relatives invested in real estate in the district. Initially, everyone contributed capital and did not borrow from the bank, buying a house for more than 5 billion in an alley on Thong Nhat Street. However, since the beginning of the year, the economy has been difficult, everyone has had financial problems, so they had to sell it, accepting a loss of nearly 500 million to sell the above house. Ms. Nguyen Thi Van, a broker of Huynh Gia Real Estate Company, Thu Duc City, said that a project to build a nearly 100 m2, 3-storey high-end villa in the suburbs of Ho Chi Minh City has just been put up for sale at a loss, reducing the price by 2 billion VND, but for nearly 3 months now there has been no buyer. It is known that the original price of the previous villas was nearly 15 billion VND.

Real estate sales information is "overwhelming" and is advertised the most by brokers to attract customers.

Luckily, Mr. Vo Minh Hung (living in District 3, Ho Chi Minh City) has just sold a townhouse in Thu Duc City to reduce bank interest. He said that the original price of the apartment he bought was 7 billion VND, but he borrowed 2 billion VND from the bank, with an interest rate of 10%/year. Since the beginning of the year, bank employees have announced that the interest rate has increased to 14%/year. According to Mr. Minh Hung's calculations, with a 2 billion VND loan from the bank, the interest rate for 2023 will be over 300 million VND, or even higher. In the situation where there are fewer and fewer home buyers, inventory will increase in 2023, so the longer he holds it, the more it costs. Therefore, Mr. Hung decided to quickly sell the townhouse at the exact purchase price from the investor, in addition, he also reduced another 300 million VND in taxes, fees... for the new owner. There are sellers, but no buyers. According to real estate experts, the pressure on liquidity is causing many investors to find ways to stimulate demand, such as discounts of 20-30% on selling prices, even up to more than 40% for some projects. It can be seen that some projects being developed in the East such as Moonlight Avenue, MT Eastmark City or neighboring projects such as Bcons City, New Galaxy Di An... are being offered for sale and discounted "hugely". Specifically, at the Moonlight Avenue project (Thu Duc City), previously brokers advertised apartments for sale ranging from 1.3 billion (apartment of 34 m2) to 2.5 billion (apartment of 69 m2), but now they are being offered at a discount of 15-20%. In particular, the discount policy of up to more than 50% is for customers who pay more than 95% of the apartment value. In case the home buyer chooses to take out a bank loan to pay, the discount will be 11.5% and interest-free for 18 months. However, although this project is advertised with many attractive incentives, it has not been filled yet due to lack of buyers. According to Mr. Nguyen Hai Phong, a real estate broker in Thu Duc City, currently, all floors are trying to advertise and adjust prices to match the general market. This discount makes business more favorable even though the profit is low, but selling the product is still the top priority to achieve the goal of "selling at a loss, cutting losses" to recover cash flow.

Many townhouses have price reduction signs but still have few buyers.

Ms. Nguyen My An, General Director of New Star Real Estate Company (Thu Duc City) said that the reason why some real estate projects have recently applied a 30-40% discount program for apartment products is because of a large inventory. In addition, the real estate market has been pushed up too high in price recently. Up to now, the market has entered a stagnant phase, with poor liquidity, forcing investors to discount products to have cash flow.

According to Ms. Nguyen My An, at this time, those who are looking to buy a house and are willing to pay a deposit are those who have real needs and real money, not having to borrow money, helping investors who are having difficulty with cash flow to take advantage of capital from customers. However, only a few are willing to spend money to "buy the bottom" of real estate and those who really need money will sell their real estate. But the current market also has a paradox: "There are sellers, no buyers".

Not only are real estate for sale flooded on websites, many investors also hang real estate sale signs at intersections, on electric poles, traffic poles... to attract buyers. Photo: MT/Tin Tuc Newspaper

Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, analyzed that 2023 will continue to be difficult because lending interest rates have not decreased. However, real estate with real value and for rent, especially products that have been formed, will not decrease much in price because supply is very scarce, while demand remains high. “Statistics not only from the association but also from many other units are showing that, despite low liquidity, real estate prices are slowing down or decreasing slightly, not decreasing deeply. The advertisements of cutting losses and deep discounts are just tricks to stimulate customers' curiosity in the current sluggish real estate market. Therefore, whether investors should wait to catch the bottom or not depends on their financial situation. In fact, the current decrease in real estate prices is mainly a decrease in project profits, not a decrease in capital of real estate projects. If people have a good amount of cash, do not have to borrow or borrow not much, this is an opportunity to compare and choose real estate products, wait for the day the market warms up to push the goods out to sell,” said Mr. Hoang Chau. Lesson 3: Real estate industry workers are continuously cut

Article and photos: Hoang Tuyet/Tin Tuc Newspaper