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Vietnam: When will the real estate liquidity recover?

Experts say that if the loan interest rate is below 10% and remains stable, cash flow will return to the real estate market.
Mr.Khoi, a member of the Market Research Working Group of the Vietnamese Real Estate Association (VARS), stated that the real estate market would only respond when the average loan interest rate drops below 10% per year because this threshold is the level that buyers and investors can bear when borrowing.

He said that the gradual adjustment of interest rates is a positive signal, although not very strong. It can be traced back to the third quarter, a critical moment for many bank deposits to mature and observe actual reactions. It is also the time to determine whether cash flow will return to the real estate market.
He also predicted two possible scenarios. In the first case, if the real estate market remains difficult and investors' confidence has not recovered, the funds may remain in the banking system and accept lower interest rates.
In the second case, if the financing interest rate drops to 6-7% or does not drop at the end of this year, high-potential funds will prioritize returning to the real estate market as long as the buyer's confidence improves.

From the same point of view, Mr. Thanh, the general manager of a construction and commercial company, believes that the interest rate chart is the decisive factor that affects whether the capital flow will return to the real estate market. Observing for decades, when the loan interest rate is high, real estate is often difficult because there is no growth momentum, and it is in trouble.
However, he believes that the current management interest rate has been adjusted many times, but the loan interest rate is around 13% to 14% every year. If this figure remains high, it will adversely impact the economy, including real estate.The cash flow will likely stagnate if the loan interest rate is only adjusted around 12-13% yearly. Cash holders hold cash temporarily, waiting instead of transferring funds into the economy. He predicted that when the loan interest rate is around 9-10%, the real estate market will have a chance to improve its liquidity.

The general manager of a real estate enterprise that is developing an urban area project in Thu Duc City said that by May 30, the loan interest rate had been adjusted to the old borrower (the enterprise and the buyer update), but it is still hovering above the threshold of 13.5% per year, which is still at a high level. Suppose the loan interest rate only drops by 0.5-0.7%. In that case, potential customers (with real demand) will continue to withdraw from the real estate market because the financing cost is still quite high, which means the risk is still high.
The CEO believes that adjusting the loan interest rate to about 9.5% per year will play an important role in promoting the return of funds to the real estate market, but certain conditions are still needed. These conditions are to break down legal obstacles, quickly solve administrative procedures, and at the same time, macroeconomic recovery (which determines the stable payment ability of individual customers) can provide an impetus for market recovery.
Previously, the State Bank raised the term interest rate for less than six months, and more than 20 banks lowered the interest rate for multiple periods so that the annual maximum interest rate reached 8.5%. Banks dropped by 0.5% every year on average, and the term was less than six months, corresponding to the decline of regulatory agencies. Compared with two weeks ago, the average annual decline of the banking system is 0.2-0.3% for maturities of more than six months.
Although the operating interest rate has been declining since the beginning of the year, the liquidity of real estate is still very low. In the first five months of this year, the transaction volume of apartments and surrounding houses decreased by 80-90% year-on-year. According to VnExpress's records, buyers still worry about high financial costs and decide to wait outside the market even if there is real housing demand.

See more: 
Some projects are starting to have liquidity again
Vietnam: Drop of 70% real estate transactions in Lam Dong Province 
Da Nang City Vietnam has many opportunities to develop high-class real estate 

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