Banks tighten credit to buy houses with over 3 billion dong, real estate prices will increase?
Recently, the State Bank of Vietnam (SBV) announced a new draft opinion, one of the revised contents compared to the previous Circular 36 is to change the provisions on risk factors with real estate loans. Accordingly, the State Bank provided loans for commercial banks to borrowers to buy houses, buy land with the amount of more than VND 3 billion according to the risk coefficient of up to 150% (tightening credit for buying houses with over 3 billion copper).
On the other hand, the SBV also limits short-term mobilization of commercial banks to lend into the real estate sector in the medium and long term. Specifically, apply a risk factor of 50% with loans secured by housing, land use rights, construction works associated with land use rights and meet one of the following conditions: serving economic activities sales, personal loans to buy social housing, buying houses under government-funded programs and projects and home loans with a value of less than 1.5 billion dong.
According to experts, this restriction of the State Bank will make enterprises face difficulties in capital, and will affect the development of the whole market in general, including concerns about real estate price increases could happen.
According to the analysis of experts, when tightening the source of real estate loans means reducing the dependence of customers on bank loans but on the other hand, individuals who buy real estate will be more difficult to mobilize cash flow of buying houses. This tightening direction may cause the market to experience an imbalance in supply and demand in the coming time. Accordingly, the real estate market is likely to increase, pushing house prices to higher levels.
According to Mr. Le Hoang Chau, Chairman of HoREA, the State Bank should not amend the Circular at this time because many new real estate businesses have just recovered, or have not yet converted into joint stock companies, nor are they eligible for seal listed on the stock market and raised capital.
Electricity and gasoline increased the impact on real estate input costs such as construction materials and labor, causing real estate prices to rise
Mr. Nguyen Manh Ha, Vice Chairman of Vietnam Real Estate Association emphasized in the recent real estate forum: "The first quarter of 2019 witnessed a series of changes in prices of essential commodities such as gasoline and electricity which will impact to the input price of real estate, construction materials, labor will increase accordingly. This makes real estate prices difficult to reduce. Indeed, right after the Ministry of Industry and Trade announced an increase in electricity prices with an increase of 8.36%, many enterprises producing construction materials (construction materials) also announced new selling prices.
According to the report of the Ministry of Industry and Trade, Vietnam's crude steel output has increased sharply in the first 2 months due to increased construction demand. Accordingly, rolled steel is estimated at 430,000 tons, up 3.38%; bar and angle steel is estimated at 391,700 tons, up 36.42%. Generally for the first 2 months of the year, crude steel production reached 3.295 million tons, up 75.9% over the same period in 2018.
Input costs such as construction materials, rising labor costs also make the selling price of real estate increase
In the domestic market, construction steel price also increased for 3 consecutive times with the common increase of 550,000 - 650,000 VND/ton. Prices of construction bricks and sand also increased by 5-7% compared to the end of last year. Input factors such as construction materials and labor prices will affect the selling price of real estate. However, according to experts, there are still many positive factors that help the real estate market continue to grow stably, such as: Demand for residential real estate is still high; The impact of the US-China trade war creates a wave of shifting production facilities to Vietnam to help the industrial property market increase strongly, accompanied by housing and service facilities for workers, workers in industrial zones will have the opportunity to develop...
New supply is scarce, real estate prices in the segments will increase
That is the affirmation of many real estate experts and businesses. According to analysts, with projects eligible for sales, the supply is largely concentrated in the mid-end and affordable segments. The supply of high-end segments will be as scarce as the projects in the center are reviewed and withdrawn. Therefore, apartment price in this segment may increase slightly.
Before the information, Ho Chi Minh City People's Committee approved the city's housing development plan in the period of 2016-2020 in the direction of limiting the development of new projects in the central and inner areas of Saigon. The decision to ban the development of new projects in central and urban areas will make the central real estate market under pressure to increase prices in the future.
Specifically, according to enterprises, in the next 6 - 12 months, the market will focus on absorbing a lot of existing goods in the central and inner cities. When the amount of this product is consumed, the market will have a serious shortage of supply and this is the time when the price of real estate in the inner city can be pushed up dramatically in the end of 2019. In 2020 the new price level will continue to be set.
According to statistics of Vietnam Real Estate Brokerage Association, in 2018, the supply and volume of successful transactions in the real estate market segments, especially the housing segment have good growth. The total supply of housing real estate reached 175,000 products, an increase of about 20% compared to 2017, the total successful transactions reached 113,000 transactions, the market absorption rate reached 90%.
In particular, condominiums account for a very high proportion of the total housing supply in Hanoi and Ho Chi Minh market, respectively 87.2% and 89.7%. The structure of apartments has changed a lot, with the proportion of mid-end segments accounting for 41.3% of the market share, higher than the affordable segment. Real estate prices do not increase much but still be very high...
However, the real estate market in the first quarter of 2019 tended to slow down, especially the supply of housing real estate market in two major markets, Hanoi and Ho Chi Minh City. The total housing supply in the first quarter of 2019 in Hanoi decreased by 25% compared to the same period in 2018, the transaction volume decreased by 28% compared to the same period in 2018. Housing supply in the first quarter of 2019 in the real estate market in HCM also fell stronger, with just over 3,000 products, down more than 50% over the same period in 2018.
The reason for the decline in real estate supply in these two markets is because some large projects in these two cities have produced a large volume of goods at the time of quarter 4/2018. The slow approval of projects, as well as reducing real estate credit is also the cause of reducing real estate supply. This has a partial impact on real estate prices in new projects coming to market at this stage.
Finding difficult land fund for the project, whether real estate price increases?
Real estate companies acknowledge that, with high land prices over the past 2-3 years, the search and access to land funds are no longer as easy as before.
There is an ongoing fact in the real estate market that: Land expansion activities of real estate companies are still quietly taking place, however in terms of scale, the level is somewhat lower than the previous years, the edge Land fundraising is also more intense. With a thirst for central land fund, many businesses promote activities to find land fund in coastal areas or neighboring provinces to expand the project development area.
The fact that enterprises seek land fund is not as easy as before also impact on real estate prices in the future
Mr. Ngo Quang Phuc, General Director of Phu Dong Group said that when the land price increases, the preparation of land fund of enterprises will face difficulties because of rising input costs and fierce competition. "When the price of land increases, the price of real estate products will be affected. Accordingly, in the coming time, the price of projects will be adjusted to increase," Mr. Phuc said.
Some other businesses also admitted that finding land fund in the context of land price increase is a problem. In particular, before the situation of land prices in remote areas of Ho Chi Minh City is no longer cheap, enterprises must carefully calculate the problem of selling products to the market. Accordingly, in the coming time, the apartment market will establish a new price level in the context of high input costs.
Mr. Huynh Ngoc Chau, L&L Group's Deputy General Director also affirmed that real estate prices in the coming time will surely increase by 10-15% compared to the current average level. Due to the increase in land fund costs, mid-end projects will establish a new price level, which may increase in the coming period.
According to Tri Thuc Tre