Real estate market continues to be sluggish

Down 20 - 30% compared to the beginning of 2021, many people even accept losses to liquidate capital but still face many difficulties. That is the gloomy situation of the real estate market in nearly a year. Experts predict that the bottom of real estate prices can last for many years and this is also a favorable opportunity for people with real needs to buy land and buy houses to live.

Investing in 5 plots of land in Dong Van ward (Duy Tien) and in Phu Ly city, Mr. Nguyen Van Q., Dong Van ward is facing many difficulties in capital turnover to pay off debts. According to Mr. Q.'s calculations, when land prices were high, if calculated the total value of his 5 plots of land was worth more than 10 billion VND, while he owed the bank and outsiders about 3 billion VND. When real estate prices fell sharply, the value of the 5 plots of land is now only 6-7 billion VND. Currently, he is facing many difficulties in transactions, even accepting losses to sell the land to pay off debts and bank loan interest but cannot transfer it.

Mr. Q. shared: Calculating the total assets, I still have about 4 billion VND left, but life is very difficult when I have to pay interest of 30 - 40 million VND per month. If I don't sell the land quickly, in just 1-2 years, "interest will give birth to interest" and there will be not much left. Moreover, the bank loan source will have the potential risk of bad debt when the principal and interest payment is due.

Real estate market continues to be sluggish — **A corner of the Shophouse Area on Le Duan Street, Phu Ly City.** Photo: Tran Thoan

Like Mr. Q., at present, many businesses and individuals doing real estate business are facing difficulties due to sluggish transactions, although prices have decreased by 20-30% compared to a year ago. Real estate prices in the suburbs of Phu Ly city and districts and towns are falling sharply, there are locations where investors accept a loss of 30-50% but still cannot trade. Real estate prices have fallen sharply due to the "virtual increase" in the past, speculators bought and sold, while there were very few people with real needs. When banks restricted lending for real estate investment, combined with the control of the State, real estate began to fall, returning to real prices.

Ms. Nguyen Thi Lan, a real estate broker in Phu Ly city, shared: In the past year, the real estate market has been quiet, with people's demand for transactions decreasing by 80% compared to the peak. It is worth mentioning that many real estate locations in beautiful urban areas with synchronous infrastructure and many residents still face many difficulties in transactions. During this time, many households have accepted to cut losses compared to the investment price but still cannot make transactions. The most miserable are individuals who speculate and contribute capital to land in new urban areas, with the goal of making a quick profit, but up to this point, they have not been able to sell and have to rotate capital contributions in installments.

Mr. Vu Quang Huy, Director of the Land Registration Office (Department of Natural Resources and Environment) said: Compared to the peak period, currently the number of real estate transfer transactions through the unit has decreased by 30 - 40%. If in the past, there were plots of land that had just been granted certificates for 1 week or half a month and were transferred, now this situation has decreased significantly. The rate of granting land use right certificates has decreased due to the sluggish real estate market and the sharp decrease in people's transaction demand.

According to economic experts, when commercial banks tighten credit for real estate investment, it will affect the behavior of borrowing capital to buy speculative land, divide and sell land, collect agricultural land to buy and sell for profit, reducing the situation of virtual real estate prices. This move will gradually cool down the price of real estate, which has been too high in the past, contributing to making the land market healthier and more stable. Moreover, when banks tighten credit for real estate investment, land investors are forced to use idle money for medium- and long-term investment, not short-term buying and selling, pushing prices up continuously as in the past.

At present, real estate experts recommend that people with real housing needs can choose locations that suit their economic conditions to invest in when real estate "hits bottom".

Tran Huu

Source