Real estate liquidity falls in 6 months

By Vu Le   June 15, 2023 | 07:57 pm PT
Real estate liquidity falls in 6 months
Apartment blocks and office buildings along Hanoi Highway and the metro line No. 1 in Ho Chi Minh City. Photo by VnExpress/Quynh Tran
The real estate market has so far this year seen weak liquidity due to various reasons, including low confidence of buyers, according to experts.

Since the beginning of the year, in both primary and secondary markets, few transactions of houses and apartments as well as beach-front villas, shophouses and condotels have been made, according to VnExpress’ observations.

In the housing primary market, many developers have offered discounts of 15-50%, and been willing to pay interest rates for buyers’ bank loans for 2-7 years, but they have found few customers.

In the housing secondary market, many cash-strapped investors have been in the same situation although they have offered discounts of 20-50%.

According to real estate consultancy DKRA Vietnam, the sales of houses and apartments as well as beach-front villas, shophouses and condotels fell 95% in the first five months of this year against the same period last year.

The Vietnam Association of Realtors said the housing market’s absorption rate was only 11% in the first quarter of the year.

According to the association’s latest report, the housing market’s low liquidity has stemmed from the fact that most of buyers have faced stuck cash flows and had difficulty in accessing bank loans amid the difficult economy, lending interest rates have remained high, idle cash have flown to savings accounts, and buyers have lost confidence in the market.

The continuous decline in the confidence of homebuyers for a long time has led to the current dormant market with extremely low liquidity.

Since late 2022 many property developers have broken their promise of handing over houses or apartments on schedule and of paying interest rates for buyers’ bank loans, damaging buyers’ confidence in the market, Doan Chi Thanh, sales director of Khoi Thanh Construction and Building Business Company, said, adding that it is very hard to restore the confidence,

According to Tran Xuan Ngoc, CEO of property developer Nam Long Group, the Government is taking measures to revive the market but it will take time for the measures to be become effective.

"Therefore, buyers’ confidence is further challenged and it may take a long period of time to restore the confidence," Ngoc said.

Meanwhile, Ngo Quang Phuc, CEO of Phu Dong Real Estate Group Joint Stock Company, said property firms should make their own efforts to regain the trust of consumers by ensuring their projects’ progress on schedule, completing relevant legal procedures for the projects, offering more flexible payment methods, and accepting smaller profits to shoulder financial pressure along with buyers.

According to Pham Anh Khoi at the Vietnam Association of Realtors, the coming third quarter is pivotal time when a large amount of bank deposits mature.

At that time, if the real estate market is still difficult, and buyers’ confidence is still low, the money may continue to stay in the banking system despite lower deposit interest rates, he said.

If deposit interest rates remain unchanged or drop to 6-7% per annum by the end of this year, and homebuyers’ confidence improves, money is likely to flow into the market.

At the end of May, after the central bank slashed operating interest rates, most commercial banks lowered deposit interest rates, bringing the highest rate to 8.5% a year.

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