In major cities like Hanoi, Ho Chi Minh City, Da Nang, Nha Trang and many provinces across the country, new supply of urban real estate and housing projects plummeted. The main cause is believed to be the fact that real estate projects in these places had not fully complied with the Law on investment, construction, land, etc.
The trading volume also dropped sharply because of the following reasons: due to the decline in the supply, the real estate prices tended to increase, and the credit for real estate business was tightened, reducing the volume of transactions; and the fear from investors and consumers when there had been many real estate projects that were not in compliance with the law, meanwhile, the information source from the state management agencies is almost not available to help them verify.
Scarcity of supply in the context of strong demand in urban areas was the main cause of increasing apartment prices in Hanoi and Ho Chi Minh City. However, the scarcity of supply was not due to the lack of space to develop the source, but to the temporary suspension of development from state management agencies. Therefore, the strong increase in prices was difficult to be accepted by the market, which was illustrated through the facts that speculation dropped and high-end housing segment with price> 50 million VND / m2 had a low purchasing rate.
The disparity between supply and demand was considerable. In particular, in large urban areas like Hanoi and Ho Chi Minh City, affordable housing was increasingly scarce. The high-end segment has thrived and is suitable for foreign customers but is limited by the quantities of products sold to foreigners. In some newly developed localities, the urban housing development policy for professionals, workers and displaced workers was not paid as much attention as the development of subdivision projects and land plot sales.
During 2019, demand remained high, especially the demand for fully legal projects, adequate investment in technical infrastructure, and projects implemented by reputable developers, having suitable prices. Absorption rate usually reached 70-80%. This is a strong point of Vietnam's real estate market and is a positive factor attracts investors in 2020.
In some places, the price of land was pushed up too high, faster than the pace of economic development and urban infrastructure, creating virtual prices. This led to the following consequences: State agencies adjusted the land tax, people demanded an increase in compensation for ground clearance, resulting in:
Decline in urban development investment activities.
Virtual prices caused investors to leave the market, depleting local economic development and the real estate market.
Tourism real estate products have actually declined since 2018 for a number of reasons as follows:
The legal framework for this product line is not clear
The selling price was pushed high and the liquidity was low, which makes it less attractive to investors
Many resort real estate projects have been suspended for inspection
Credit cash flow has been tightened
Foreigners are not allowed to buy this kind of real estate product
In 2019, large-scale resort real estate projects with closed service complexes, international standards and implemented by reputable investors still attracted many investors. Absorption rate in those projects was relatively good.
The total number of transactions in 2019 had no significant fluctuations. At the end of the year, the trading volume was slowed down due to COCO BAY's case, which worried investors. Transactions in the fourth quarter of 2019 were at the lowest level of the year. The localities with a good number of transactions during the year were: Quy Nhon, Da Nang, Binh Thuan, Ninh Thuan, etc.
The resort real estate market was benefiting from strong growth in the number of domestic and foreign tourists, as well as the growth in the number of international direct flights. Therefore, tourism industry still creates strong attraction for investors with long-term vision.
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