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Saigon real estate has abnormal developments

Ground lands of Ho Chi Minh City

If the land fever in Ho Chi Minh City continues to spread as fast as today. Then the real estate market bubble as in 2007-2008 will reappear.

Recent survey of consultancy units and experts showed. Real estate prices in almost all locations in the city increased rapidly.

Real estate type land not only increased for the high-end segment, but also for the popular segment is also the situation. Even the outskirts are very strong. There are some places today, the price of the next one has increased.

The land fever is in the hottest period, Dr. Dinh The Hien – Economic experts advise investors to be cautious with their investment decisions.

Land in HCMC
HCMC land is entering the hottest period. All prices in the city area are pushed up

Continuing so, the balloon will bulge and explode very hard to control

In fact, the land market is experiencing high growth rates in the high and low end segment. There are many possible explanations for this phenomenon:

First, due to customer psychological factors. Many people believe that the supply of apartments will remain, but the ground is increasingly narrow. So they have turned their investment.

Information such as the state is about to split the land and the book, the giants are about to build “super project”, bridge construction, new buildings, …

It also created the effect and increased investor confidence rushed to the ground. Even the dynamics of price increases in some areas are just rumors or neighborhoods

Secondly, the small investors before they are not brave in investment. Now, when the market is warming up, they are willing to spend a few hundred million to buy land near the wave of investment.

Thirdly, investors find that the profitability of land is higher than that of investing in apartments. This cause also creates motivation to “wave” land prices increase and spread wider.

ground land price
When buyers, bustling sellers, the stork also flashed the opportunity that pushed the price of housing up.

The fact is that many investors are investing in domino effects. Seeing someone else making a profit is easy to follow without a thought.

We have witnessed a time when homeowners, people who participate in real estate that causes land prices to rise in virtual fever situation occurs.

In fact, land prices only increase to a certain limit. Therefore, if investors do not calmly consider, but follow the crowd, it is likely that these areas will form the “dead” land.

The reality is that at this time, right next to the villa project, Khang Dien’s home in District 9. The price of it is as good as fresh shrimp, but there is still a villa area being just for planting grass.

In terms of economics, to know the price of a plot can reach the limit to what extent. Investors must rely on their exploitability and compare it to land in similarly similar areas.

Secondly, what is the profitability of the lease after the construction? If the rental price reaches a minimum of 2% / year / total value. New land plot is called temporary investment prospects.

The danger level of virtual land fever is enormous

Firstly, bad debt of the banking system (NH) from the overheating effect of real estate in the period 2008-2011 to date is certainly not resolved. The evidence is that the state is still trying to clear the “blood clots” bad debt. It made economic slow growth.

Secondly, in the period of 2008-2009, there were only 10,000 apartments and land in Ho Chi Minh City.

Now, the supply of apartments and land is already 50,000 products and it is predicted that in 2017-2019 will add 50,000 more products. Thus, the scale of apartments and land is now much larger than the previous period.

The above issues enough to see, if not find the right solution at the moment it is clear that real estate bubble will be able to return. Worried that if this bubble happens, the level of danger and its impact will be much more serious. Because the size of the market is now much larger.

As we all see, the real estate crisis in 2008-2011 has caused many investors to taste bitter fruit, white hands, falling into debt, …

Currently bad debt of many NH is still originated from the property bubble 2007-2008. So far this bad debt is still clinging to the economy and people are still pained with the question: How, when to be able to resolve all bad debt related to real estate to free the economy.

Not only that, look back in 2008, NH loans up to 70% of collateral value, or can loan up to 80% is terrible then.

Moreover, the market was backed by huge capital stock. Banks and companies can mobilize capital is very convenient at that time. But now the commercial banks are easy to increase capital.

From some of the above mentioned conditions, the HCM City market is facing huge risks. Therefore, if it is not careful now, its effects on the economy will be unpredictable.

Real estate investment is a market issue, investors choose for themselves, words, losses. So the government has no reason to interfere in this matter.

However, if the investment capital is mostly from the banking system, the government has the right to intervene by monitoring credit standards. And set policies to ensure the safety of the entire system. This will indirectly help regulate the real estate market in a more healthy way.

The state now needs to closely monitor the credit activities of commercial banks. When bank system provides capital safe, the hot land will not affect much the economy.

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