Market still stuck in the doldrums
25-07-2012
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Many construction and property trading companies have already gone to the wall because of soft demand, said economist Bui Kien Thanh. The market would only really recover when people had money again to buy houses, he said.
Stephen Wyatt, country manager of Knight Frank Vietnam, said economic conditions within Vietnam have improved dramatically in the past 12 months with inflation plummeting from highs in 2011 and interest rates falling.
Despite this news, the residential market continues at a sluggish pace as banks remain reluctant to lend unless buyers/developers meet strict lending requirements and developers are trapped having half sold projects.
“This is a buyer’s market and they know it, there is a huge amount of stock available and buyers are prepared to study all projects and developers incentives until they find the best deal, in addition, most buyers believe the prices will reduce further so many are prepared to wait,” said Wyatt.
In its latest report released recently, the wire service Property Report which covers real estate bit in Asia said that Vietnam remained an attractive market in the long run. In the past decade Vietnam, the world’s 13th largest country by population with nearly 90 million people, has emerged as one of Southeast Asia’s strongest performers in terms of economic growth, the report said.
“While strong growth came at the expense of double digit inflation and interest rates, it still sees compelling opportunities, especially in the residential sector,” it said. In Vietnam, the commentator said, he saw demand for real estate underpinned by rapid urbanisation and compelling demographics.
“Compared to other Asian nations, Vietnam has the youngest demographic profile with approximately 80 per cent of the population under the age of 40. Given the fast growing middle class, there is significant latent residential demand in Vietnam,” he said.
The concern however, is that after growing strongly in 2010-2011, current market movements are still unpredictable, so the no-rush attitude among buyers is prevalent at the moment. “However, we believe demand is still huge and we expect the mass market housing segment to recover first,” he said.
As the cities grow, and urban migration and income rise, demand for housing will continue to increase. Investing in Vietnam is associated with potential risks, including the high inflation and challenges in fiscal and monetary policies. “However we believe Vietnam’s fundamentals are compelling over the long term,” he said.
