HCM City: Real Estate Market Suddenly Change Direction

In the first months of 2016, the real estate market in HCM City suddenly shifted to the high-end segment, mainly due to the volatility of the capital market, specifically the amendment of Circular 36 of the State Bank of Vietnam.

Getting into difficult times

HoREA’s latest report on the property market shows a generally positive outlook. However, there are also concerns that can not be ignored.

The real estate market in the first 5 months of 2016 shows signs of slowing down, and there are also factors that threaten the sustainable and stable development. For example, signs of phase shift to high-end property segment while the lack of small and medium-sized apartment with 1-2 bedrooms, the price is affordable; There is a huge increase in secondary business investors, buy and sell back …

Looking for HoREA’s real estate market reports, consecutive in the first quarter of 2016, recorded a slowdown in the market and this trend lasted several months.

The real estate market in HCM City suddenly shifted to the high segment

Comment on Ho Chi Minh City’s market in the last months of 2016, HoREA said that will be better than the first 5 months, but the whole 2016 real estate market tends to level off and still latent factors unstable.

Explaining the unexpected turn of the HCM City real estate market in the first months of 2016, some experts say that this is mainly due to the volatility of the capital market. 36 of the State Bank of Vietnam (SBV). In addition, there are a number of other causes, such as the explosion of investor-customer disputes, but this is secondary.

In January, the State Bank of Vietnam (SBV) announced a draft amendment to Circular 36/2014 / TT-NHNN regulating limits and prudential ratios in the operation of credit institutions and foreign bank branches.

At the time of publication of the draft, credit institutions could use 60% of short-term mobilized funds to convert to medium and long-term loans (according to Circular 36). According to the draft of the SBV, the rate will be lowered to 40%.

Meanwhile, the actual data provided by HoREA, at the time of publication of the draft, the short-term capital mobilized for medium and long-term loans has exceeded 36%, less than 4% of the room. This means that credit institutions will no longer have the capital to pump the real estate market. Therefore, the whole market was “shocked” for a long time.

Until May 5, 16, Circular 06 replaced the new Circular 36 set the short-term capital mobilized for medium and long-term loans is 50%. In the first 6 months of 2016, the real estate market has 4 months of waiting for the new policy, which explains why the market suddenly stopped in the first half of the year.

Signs slope

According to Savills Vietnam, in the first quarter 2016, Ho Chi Minh City has nearly 7,500 apartments from 20 properties opened for sale, bringing the total supply of the market to 37,500 units (forecast total supply of real estate market Ho Chi Minh City in 2016 about 60,000 units).

Current supply has decreased 1% qoq but increased by 82% y / y. According to Savills, the average and low price segment recorded the best deals in the market when purchasing power. increased by 8% in Q1 / 2016. This is the only segment that has seen transaction growth in early 2016.

Successful real estate transaction data is also a mystery, most of the integrated market research units are based on published data of enterprises, while enterprises have published real numbers. Or not, only heaven knows.

HoREA offers a much larger 9,000 units.

Thus, the successful trading data of market research units are very different. The data of successful transaction reported by Savills is quite different from HoREA’s data. Specifically, in the first quarter of 2016 there were 6,400 apartments successfully traded, down 17% compared with the previous quarter.

Notably, the absorption rate of the whole market was only 16%, down 3% compared to the previous quarter. Meanwhile, HoREA offers a much larger 9,000 units.

Experts Nguyen Xuan Chau said that is not unexpected with the development of the market, this is expected from the end of 2015. The second half of 2014 and the real estate market in Ho Chi Minh City run very well triggered the wave run Racing development of real estate projects.

Only about 10 leading real estate companies now have a total value of goods put into the market in the two years 2016-2017 is about 200,000 billion, equivalent to $ 10 billion. This is a very large amount of real estate that in the current economic situation, the market can not absorb all these goods.

It is worth mentioning, most of the real estate is now high-end segment, selling price over 30 million /sqm. Next time, when the supply is too much force the owner to compete fiercely for sales.

According to another expert, the indexes from the capital market today cannot call it a good support for the property market. Circular 06 has been exposed, investors have been able to breathe a bit but looking at the macro indicators is hard to stay optimistic. By the end of 2015, outstanding loans for investment and real estate business reached VND393 trillion, up nearly 26% compared to the end of 2014 …

In 2015, the Financial Supervisory Commission, the Prime Minister has repeatedly noted this … Short-term capital mobilization rate for medium and long-term loans before is 60%, now 50% According to reports HoREA has approached the threshold of 40%, the room mobilized from this channel is no longer large. When the capital market cannot do good support role, the real estate market will be difficult immediately.

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