Housing prices unlikely to drop despite pandemic

PUBLISHED ON May 4, 2020

Experts believe that the real estate market is unlikely to fall into a crisis and housing prices will remain stable because market demand remained high while supply is limited.

The COVID-19 pandemic is heavily weighing on a number of sectors, and property is no exception. The market saw a significant fall in transactions in the first quarter of this year.

Statistics from CBRE Việt Nam showed that only 1,600 apartments were put on sale in the first quarter, much lower than the quarterly average of 6,500 apartments recorded since 2012.

Despite fewer transactions, prices have not dropped off as expected. According to CBRE, average housing prices in the primary market rose by around four per cent during that time.

The Việt Nam Association of Realtors said market supply and successful transaction volume in the first quarter of this year were both at their lowest levels for the past four years, with no new developments launched.

The association said buyers were seemingly waiting for drops in housing prices to make purchasing decisions. Buyers tended to think that the property market would fall into a crisis and prices would drop due to the impacts of the COVID-19 pandemic.

However, experts said that a crisis was unlikely.

The situation appears to be different from the real estate crises in 1997-98 and 2007-08 when housing prices fell to rock-bottom levels. The crises were fuelled by easy credit for real estate which inflated housing prices, coupled with low-capacity developers in the market.

COVID-19 pandemic would cause difficulties in the short term, but real estate was a long-term investment.

According to Phạm Đức Toản, general director of EZ Real Estate, housing prices would remain stable in the medium and long terms because of limited supply.

The previous crises eliminated weak developers from the market, and now players mostly had good capacity and experience, which would help them overcome this difficult time.

Vũ Cương Quyết, general director of the Northern Green Land Real Estate and Services Joint Stock Company, said that instead of lowering prices, developers were offering other promotions to attract buyers, such as longer interest terms and free interior design packages.

Source: Viet Nam News