When the Covid-19 epidemic broke out, it was very difficult to invest abroad or study abroad. Therefore, abundant cash flow returned to the domestic market and real estate became an ideal asset holding channel for investors.
Since the beginning of 2020, there is a paradox going on in Vietnam's real estate market, even in some major markets in the world, real estate prices have increased rapidly, despite the Covid-19 pandemic, regardless of the situation. Despite the negative growth of the world economy and large-scale job losses. What happened when economies created less value, individuals earned less, rental spaces were empty, but property prices rose just as quickly.
In Vietnam, the land fever took place strongly, some real estate areas in the provincial markets such as Bac Ninh, Bac Giang, Thanh Hoa, Da Nang, Long An, Dong Nai ... have increased by 50-100%. compared to mid-2019 prices, even the first quarter of 2021 will continue to increase 10-20%. In many areas, auctioned land increased 3-4 times the starting price in just one morning. There are even hot spots where land prices increase day by day, delaying the purchase rate.
In Hanoi, the higher the value of real estate, the stronger the growth rate
In the two markets of Hanoi and Ho Chi Minh City, it is worth mentioning that the higher the value of real estate, the stronger the growth rate, a number of villas, townhouses, and shophouses in 2019 were purchased for 5 Currently, -10 billion dong is worth 10-20 billion dong, in some places it has increased to nearly 30 billion dong. Typically, at the shophouse project Him Lam Van Phuc (Ha Dong, Hanoi), although the price is up to more than ten billion VND/unit, the liquidity is still very high, the transaction reached 90% after only a few months of opening for sale. Along the South An Khanh area, the price of villas and adjacent villas, although far from the center, has also recorded a sharp increase since the beginning of 2020.
Explaining the cause of the real estate fever, experts say that the phenomenon of "cash abundance" and cheap money everywhere has chosen real estate as a place to stay. In the past, when there was money, there were many options such as buying gold, buying foreign currency for storage, buying a house abroad, saving money, traveling, buying real estate or reinvesting in production and business. However, since 2019, the gold price has set a new peak and there are many unpredictable fluctuations, Covid causes continuous social distancing, so the cash flow cannot be reinvested in production and business, along with the investment cash flow. Foreigners are also limited, so they focus on real estate.
According to statistics of the American Association of Realtors (NAR) released in 2017, Vietnam is in the top 10 countries that buy the most houses in the US with about 3 billion USD/year. When the Covid epidemic broke out, it was very difficult to go abroad, students also had to return home, so it became more difficult and less safe to buy a house abroad to settle down or store assets. before. The number of billions of dollars that Vietnamese people used to buy houses abroad, now returning to the domestic real estate market, is also a strong factor affecting the market, especially high-value real estate.
Along with the flow of foreign investment capital turning to the domestic market, remittances are also pouring into the country. Specifically, despite the complicated developments of the Covid-19 epidemic, the cash flow to Ho Chi Minh City in the first months of 2021 increased sharply to $ 2 billion in the first 4 months of the year, an increase of 7% compared to the end of 2020 and an increase of 18% compared to the end of the year. with the same period last year. It is expected that remittances in 2021 will increase by 7% compared to the end of 2020, reaching 6.5 billion USD. In the context that investment channels on the world market such as gold and bonds as well as production and business activities tend to decrease and are uncertain, the amount of remittances in the first 4 months of the year mainly focused on the stock market and real estate is very active.
Cash flow tends to pour into the real estate market in the near future
In addition, capital flows from bonds, remittances, public investment capital, capital from potential investors... have also tended to increase into the real estate market in recent times. Speaking to the press, Dr. Nguyen Tu Anh, Director of the General Department of the Central Economic Commission, said that in Vietnam, it is very important to pay attention to the informal economic sector. In recent years, there has been a huge flow of money going out of the market and not returning to the banking system. It forms the flow of money in the informal sector as businesses borrow from each other and people borrow from each other. Due to the complicated development of the Covid-19 epidemic, activities in the informal sector were almost stalled and reduced. Accordingly, the cash flow began to return to official investment channels, including the real estate market.
It can be seen that the abundant money in the market has had a strong impact on the real estate market. It is forecasted that from now until the end of the year when bank interest rates continue to remain low at 3-4%, the cash flow from the waves of securities also tends to cut interest to real estate, the real estate market production continued to receive new upward impulses. In particular, cash flow will be wiser when investing in valuable, high-use real estate such as townhouses, shophouses or real estate near large industrial parks.