The scenario of fast fever, long-lasting silence of real estate
After each brief boom, the real estate market stagnates for longer, a scenario that has repeated itself over the past few decades.
Notes of VnExpress shows that, from 2013 (the bottom of the latest real estate crisis) up to now, the real estate market has alternated with a period of solitude for 5-6 years, while the hot growth period only lasts for about 2 years, at most. is 3 years.
Specifically, the land fever took place throughout the districts in Ho Chi Minh City in 2016, then spread to many other provinces and cities in 2017. This time, the real estate supply exploded everywhere, the tourist capitals The schedule of launching resort products with high purchasing power and commitment to huge profits. However, from mid-2018 onwards, the optimistic signals gradually decreased, then many difficulties arose during the next 5 years.
Since 2019, real estate has shown many signs of deceleration, reflected in legal bottlenecks, dwindling supply, and unstable liquidity. The outbreak of the Covid-19 pandemic caused the market to be negatively impacted for most of the time (2020-2021). By 2022, liquidity will plummet and many price drops will take place when the market is flooded with credit tightening and corporate bond control, leading to a serious capital shortage.
This year is said to be a pivotal year, which is vital for businesses in this industry because the difficulties are more forecasted and may last into next year. A turbulent decade (2013-2023) suggests a hot real estate growth period of 2.5 years, while a difficult period of stagnation is estimated at 5 years and is likely to last longer.
Real estate in the central area of District 1, Ho Chi Minh City. Image: Quynh Tran
Data from Mogin Holdings also shows that in the period 2008-2023, the market was only hot for a total of 5 years, but there were 11 years of deceleration. This is the consequence that real estate has to pay the price for a period of rapid boom but lack of stable foundation.
According to Cushman & Wakefield Vietnam, in the last 3 decades, from 1993 to 2023, it is estimated that there are 4 real estate cycles, only 10 years when the market is hot, while nearly 20 years are quiet.
Commenting on three decades of ups and downs of the real estate market, Ms. Trang Bui, General Director of Cushman & Wakefield Vietnam, confirmed that the quiet market period is always 2-3 times longer than hot growth. Ms. Trang forecasts that 2023 will still be difficult, which can be seen as the final milestone of the 10-year cycle. This expert said that Vietnam’s real estate market is about to enter a new cycle from 2024 onwards and the recovery time may fall in the following years.
CEO of Mogin Holdings Investment Consulting Company Luong Dinh Thuy Van, commented that the cycles of the real estate market have in common, which is often heavily influenced by economic levers. Observing from practice, she believes that real estate always has a short boom period, but once it decelerates, it lasts longer and is more difficult to recover.
According to Ms. Van, every 2 years this market is hot, 5-6 years later it settles and hibernates. Market booms and busts coincide with economic growth and recession cycles.
CEO Mogin Holdings pointed out the levers: global economy, business and investment related legal, supply and demand in the market, finance (capital flow), policies and planning information, infrastructure and force majeure factors such as wars, epidemics, and natural disasters are all happening less favorably in 2023. Therefore, this is a challenging year and still classified as a dormant market.
Mr. Nguyen Loc Hanh, General Director of Ngoc Asia Company, said that if looking at the long cycle from 1993 to 2023, the hot growth of the real estate market depends on the openness of the economy and the credit valve.
Mr. Hanh analyzed, in the period 1993-1994, the Vietnamese economy opened up, and the real estate market heated up. In 2006-2007, the stock market attracted capital, abundant cash flow, and the real estate market thanks to this fulcrum, also grew hot.
In the 2016-2018 period, real estate buyers have easy access to credit, businesses race to issue bonds, plus the pumping of projects across provinces and cities across the country makes real estate explode in both price and transaction volume. But when the economy is difficult, the credit valve closes, the bond control is tighter, the real estate market also slows down and decelerates.
According to Mr. Hanh, it is difficult to make a comprehensive assessment of a real estate fever because in fact, the phenomenon of hot growth often occurs locally in a few areas, provinces and cities. The fever comes on quickly and ends quickly for several months, then moves to a new fever point at a similar rate. He also acknowledged that the process of deceleration and depression of the real estate market usually lasts longer than booms and leaves a heavy impact on the economy.
Vu Le
