The Explosion Of The Real Estate Market When Appearing The 4th “Fever”

According to the assessments in 2016-2017, the real estate market may appear the 4^th fever.

The first real estate fever appeared in 1993 and lasted until the end of 1994. This was the fever that occurred when the Land Law came into existence, which recognizes the purchase and sale of land use rights and when the country basically escaped from the socio-economic crisis.

Just review 3 fevers in the real estate market in Vietnam in recent years

1. The first fever:

It appeared in 1993 and lasted until the end of 1994. This was the fever that appeared when the Land Law came into existence, which recognizes the purchase and sale of land use rights and when the country basically escaped from the socio-economic crisis.

After the state levied income tax and increased the real estate transfer rate, the real estate market went from one peak to the next and then stayed there for six years (lasting from the beginning of 1995 to the end of 2000). At the peak, the price is four times higher than the bottom (before the fever).

2. The second fever:

It appeared at the end of the year 2000 and early 2001. It appeared at the same time the gold price rises when the quote including payment is taken gold as the standard. In the 2^nd fever, prices increased by 2.5 – 3 times (16.5% – 20.1% per year respectively).

At the end of 2002, this fever went from one peak to the next. The real estate market was virtually unchanged for nearly six years, mainly due to the steady and persistently high gold prices during the first decade of the 21st century with the appearance of the stock market and the creation of a new investment channel.

3. The third fever:

When the stock went from one peak to the next in March 2007, a small amount of capital was transferred to the real estate market, which caused the real estate market to enter the 3^rd fever. It was known that the main cause is the high inflation (19.89% per year), and the high interest rate (23-24% / year); Moreover, later that year, there was a financial crisis and economic recession in the world.

The real estate market has been frozen from the end of 2010 to the end of 2014

In response to domestic shortages, the government launched a stimulus package of nearly $10 billion through the provision of credit interest subsidies and the introduction of about $21,500,000,000 in credit, up to 120% of GDP. Accordingly, a large amount of credit has been poured by businesses and borrowers in the real estate market, which causes the real estate market to return into 2010. But real estate market was frozen again from the end of 2010 to the end of 2014.

4. In 2016 – 2017 the market is really booming, there may be the 4^th fever

The real estate market from the end of 2014 has warmed up and there has been the hot sign from the end of 2015. Thus, it is likely that there will be the 4^th fever in 2016- 2017. According to experts, this fever has occurred due to several factors:

– First: the low inflation in 2014 (up 1.84%), but in 2015 increasing of 0.4% after 9 months.

– Second: The stock index, after rising for three years, is likely to increase further in this year and there will be a large amount of capital from the stock market being transferred to the real estate market.

– Third: Gold price is going in jagged shape but in downward trend. The real estate fevers have caused many consequences such as the attraction and burial of capital into the market, which causes bad debt and the vicious circle: real estate – debt – real estate down – the evaporation of the mortgage – the bank exhausted – the higher debt.

The real estate market is hotter and hotter over a long time, which has the effect of dealing with bad debt and facilitating credit growth as well as preventing bankruptcy … However, if it does not handle well, the vicious cycle can restart.

To avoid the bad effects of real estate fevers, commercial banks need to control of real estate credit and credit well. Investors must focus on completing the construction works to increase supply and paying attention to the structures of products…

See more news information at: Vietnam Real Estate News