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Credit flow warming real estate market
It is still too early to talk about the recovery of the real estate market. However, experts say that the stronger credit flow is warming up the market.
Market warming up
The real estate market now has opportunities to improve liquidity.
Credit growth has been increasing steadily with the credit by early May having increased by 11% over the end of 2008. Nearly VND280 trillion worth of loans under the interest rate subsidy programme have been pumped into the national economy just in the last two months. It is expected that medium- and long-term outstanding loans under the interest rate subsidy programme will also increase in the time to come. Some of the capital will flow into the real estate market.
Moreover, the sum of VND49 trillion worth of capital for the social housing programme will be allocated by the government to localities. Some of the foreign direct investment in real estate will be disbursed. Individual investors will also inject their money in the real estate sector when they see the warming of the real estate market and believe that the market will escape from its depths.
Trinh, a real estate broker in Hanoi, related that the demand for real estate has become big since the beginning of the year. Houses and land plots in advantageous positions with prices of less than VND3 billion have been selling well. Trinh believes that if the VN Index keeps rising, a lot of investors will transfer profit from stock investments to the real estate market.
The current credit policies (interest rates, loan deposit) applied by commercial banks have become more flexible. Both joint-stock and state-owned banks plan to push up loans to fund individuals’ house and land purchases, especially apartments in the projects funded by the banks themselves.
Some experts believe that when the real estate market heats up, this will influence the stock market, thus making the real estate market cool down.
Short-term forecasts
Dr. Tran Kim Chung from the Central Institute of Economic Management (CIEM) said that the real estate market in the time to come will see ups and downs, but no big fluctuations, though there will be different fluctuations in market segments.
Houses and apartments with medium prices at real estate projects will sell well.
The second market segment which is expected to be bustling in the time to come is lower-priced land plots and houses (less than VND1 billion). The products of the social housing programe will also be bustling, while the fourth segment, high-grade apartments, will be quiet, at least from now to the first quarter of 2010.
According to Associate Prof. Dr Hoang Van Cuong from the Hanoi Economics University, when the real estate market is quiet, and real estate prices decrease, it is the time to develop the lower-priced housing programme. However, Cuong said that the final target of the real estate investment stimulus programme is to revive the market segments with high liquidity, and to prepare a supply of real estate for the future, when the economy recovers.
Cuong said that the investment stimulus should aim at subjects which have capital capability, while encouraging people with money to inject money in business. Meanwhile, low-income earners should not be seen as subjects who can help stimulate investment and curb economic downturn.
VietNamNet, LD
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