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Ideal interest rates will heat up the real estate market in June
Analysts believe that the bank interest rates, which have decreased to reasonable levels, will help reactivate the real estate market, making it bounce back in June 2009.
Real estate trading floors in HCM City have reopened after the long Tet holiday, attracting a lot of visitors, but few buyers.
According to ACB Real Estate Trading Floor (ACBR), Nguyen Dinh Chieu branch, since February 2, or the eighth day of the Lunar New Year, the floor has received 68 visitors, including 18 clients who offered to sell houses, and 25 clients who sought to buy houses. However, no successful offer has been made since the beginning of the Year of Ox. The broker on the trading floor said that he hoped the God of Luck would come the next day.
Other real estate trading floors in the city also resumed after-Tet operation on the eighth day of the Lunar New Year and have reportedly seen no successful transactions in the last four days.
General Director of ACBR Pham Van Hai said that the first quarter of 2009 will be just the time for investors to analyze the feasibility of real estate projects and to seek financial sources. After the period of ‘warming up confidence,’ the real estate market will begin seeing positive changes from the second quarter of the year.
Hai said that the interest rates have decreased to levels ideal for investing. Therefore, he believes that in the time to come, those who hold big sums of money will not leave their capital idle or simply leave it in the banks, but will inject it in business production, including real estate projects.
The ACBR’s manager also believes that the decreasing bank interest rates and the decision on delaying corporate income tax collection will serve as a driving force to lure investors back to the real estate market. However, he does not put high hopes on the recovery of the market in the first quarter of the year, saying that only the third quarter will be the time for the market to warm up.
Chairman of the HCM City Real Estate Association, Le Hoang Chau, has forecasted that the real estate market will absolutely escape from difficulties beginning in August, to enter a stabilization period, where more supplies will appear, thus helping make the market more bustling.
Chau added that all the prevailing conditions prove to be favorable for the real estate market to warm up: the basic interest rate has decreased to 7% per annum, the ceiling lending interest rate is at 10.5%, while businesses can get an interest rate subsidy of 4%, and the Government has delayed the collection of corporate income tax.
However, he still has a concern that investors have lost confidence in the market. He thinks that in Q1, it may occur that real estate developers insist on not slashing sale prices, while buyers expect prices to return to levels seen before the ‘land fever’ period.
Dinh The Hien, an economist, also said that the current interest rates are reasonable, which will create favorable conditions for real estate firms to develop projects. The firms now have to borrow 70% of capital needed for projects from banks
Though believing that the current interest rates are supporting real estate developers, Hien does not expect the recovery of the real estate market in 2009. Hien thinks that the price will keep decreasing slightly and the market will only regain steady development beginning in April or May 2010.
Explaining the viewpoint, he said that in Q2 2009, investors will analyze the market and regain confidence. In Q3, they will make investments thanks to soft interest rates. It will take some more time, 6-8 months, to see the investments become realistic,
“If the interest rates can be lowered further, Q2 of 2010 will be the time when the market wakes up after the long hibernation,” Hien said.
VietNamNet, VNE
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