According to CBRE, in Vietnam, real estate owners will continue to offer discounts due to competitive pressure, but the discount of up to 30 -50 percent of the initial price will likely activate the market.
A research report on the real estate market in 2013 and assessment by CBRE Vietnam was recently released on January 9th 2013. According to this report, the Vietnam real estate market in 2012 was full of storm, with decline in all segments, and the 2013 forecast is similar.
In 2012 the economy gradually stabilized and there have been positive trends supporting for tough real estate market. Monetary policy is loosened, the interest rate and rediscount financing decreased by 1 percent, the maximum interest rate of 8 percent, and credit increased by 9.3 percent, all this will reduce difficulties for businesses. Besides, inflation tends to decline and the stock market recovered slightly after months of decline, also a good sign.
However, besides many problems leaving markets facing difficulties, such as reduced labour market (Hanoi unemployment rate is 4.8 percent, up 0.3 percent over the same period); large inventory, backlog in construction estimated at US$90 trillion, loans related to real estate rose as high as US$5 billion.
Apartment price expected to decrease 10 percent in 2013
The above mentioned challenges are making the larger property market, apartments in particular, continue to decline in 2012, since the first peak in quarter II, 2011. As reported by CBRE, new supply decreased about 65 percent from the previous year; it is estimated that there were only about 8000 newly offered apartments.
CBRE representative said: "While at the beginning of 2012, individuals cut large holes in the secondary market up to 30 percent of reduction of the purchase price, at the end of 2012, investors are offering drastic discounts for primary prices, in some cases up to 40 percent of the original price."
According to CBRE calculations, in 2012 the price of apartments fell by 15 percent compared with 2011 and by 20 percent compared to 2010, at the end of the year, the downtrend has slowed. This makes housing prices much more affordable in 2012 than in previous years.
Liquidity in the market is also much lower than the previous year, represented through sales, while in 2012 sales reached 5,000 units, in 2011 and 2010 sales achieved over 12,000 units.
The number of unsold apartments was a controversial topic in 2012. According to statistics of CBRE, Hanoi had 20,500 unsold apartments, which were offered by investors but there was no buyer.
Therefore, it will take 1.5 years to 4 years to sell out this inventory, depending on market resilience. CBRE forecast it based on sales in the past year.
CBRE given two scenarios, the optimistic scenario is that the market returned to positive consumption in 2011, while the bad one is that the market poorly maintained consumption of 2012.
There was too much information in the recent year about lower prices, but sales still declined. This proved that the price strategy is unlikely to bring effectiveness for projects. Recently, many investors in Ho Chi Minh City agreed not to further reduce the price of apartments; however, it is not easy to apply it. CBRE found that buyers are not in a hurry, due expectations of further price reductions.
Entering 2013, CBRE expects the secondary offering price to be further reduced by 10 percent, following a 15 percent drop in 2012. Transactions will remain at a low level, concentrated mainly in the project with particularly attractive price compared to the competitors and good construction progress.
Investors will continue to offer discounts due to competitive pressure, but reductions of up to 30 -50 percent of the initial price is likely to make effect. Therefore, 2013 is expected to be a challenging year for investors.
50 percent of villas and attached apartments unoccupied
Similar to the residential segment, the segment of apartments in urban areas also experienced a challenging 2012. Price offered in the secondary market fell over the 7 quarters in a row, while trading volume was at a low level in 2012.
CBRE evaluated that secondary prices fell 20 percent from last year and down 30 percent from their peak in quarter II, 2011. Apartments completed in 2012 increased significantly by 8000, equal to the total of several previous years, but on the other hand they continue to put downward pressure on prices especially in Ha Dong and Hoai Duc districts. At least 50 percent of the available units are not occupied.
Market outlook 2013 will depend on buyers, mostly those who have the need to buy house will actively participate in the market. These buyers will find finished projects instead of the project on paper.
The house below 10 billion that can be used immediately will be sold due to the appropriate buyer's desire for quality and price. Investors remaining in the market will adapt to the new market conditions with products that meet the needs of buyers.
Vietnamese
