Housing prices unlikely to drop despite pandemic: experts

HanHomes Giang Bien in Long Bien District, Ha Noi. Despite the COVID-19 pandemic, experts believe that housing prices will not drop significantly. - VNA/VNS Photo Minh Nghia

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 Viet 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 Viet 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.

The market was quiet in the first quarter due to social distancing, real estate expert Dang Hung Vo said. The market still had high demand and limited supply, he added.

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

Vo said that that the number of new projects licenced in 2019 was equivalent to just 20 per cent of the previous year.

In the next three years, new supply would drop significantly, he said.

According to Pham Duc Toan, 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.

Vu Cuong Quyet, 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.