Six reasons to break through real estate bubbles in the past decade

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With the rapid increase in GDP, companies and people make it easy for real estate to become a profitable investment channel for speculation, trading and speculation.


With the rapid increase in GDP, companies and people make it easy for real estate to become a profitable investment channel for speculation, trading and speculation.

In the report Real Estate Market has just announced, pointed HCMC Real Estate Association (HoREA) on the reasons for the real estate market formed balloon period 2007-2011. There are 6 The cause of the real estate bubble is swelling and disintegration in the heyday of the past.

First, GDP growth in 2007 was 8.48%, which is very high. HCMC's GDP reached 12.6% in 2007, also the highest growth in 10 years since 1997. This has led many companies and people to easily make money and real estate is the first channel. Private property is selected for storage, for business, including speculation.

Secondly, the direct cause of the easing policy. Commercial banks have subprime loans, which shows very high credit growth of 37% in 2007. More specifically, a large part of the credit and social capital went to investment property. At the same time, commercial banks have relaxed the control over credit loans that should have been used.

Thirdly, the market has developed the demand-supply gap in the real estate market, mainly the warm development in the high-end real estate segment.

On Wednesday there were many real estate investors, real estate agents, real estate agents, real estate agents, property speculators, surfers and professional speculators. Price manipulation, inflating prices, creating waves, increasing the virtual price is very high compared to the real value of real estate to benefit, to give a quick answer, and to stimulate surfing behavior.

Fifth, the competent authorities do not use timely and effective tax instruments; credit tools; Tools for planning, spatial planning and urban development to effectively regulate the real estate market when bubbles appear.

Sixth, the bubble crisis in real estate in 2010 is another cause of the $ 1 billion stimulus package in mid-2009, some of which this source of capital is being used for the wrong purposes to invest in real estate without being strictly controlled by commercial banks.

East of HCMC real estate. Image: Vu Le

On the one hand, to find the cause of the real estate bubble and the crisis in the past, HoREA claims that this nightmare will not happen in 2018 – 2019 because credit growth is still under control.

Credit growth across the country reached 18.17% in 2017 (about half of the 37% of credit growth in 2007). It is expected that credit growth in 2018 will amount to approximately 17%.

The State Bank of Vietnam (SBV) has announced its policy not to relax credit facilities in the last months of the year, and to maintain a cautious, tight and flexible credit policy and to gradually reduce lending to the sector. property. In 2018 commercial banks may only use 45% of short-term deposits for medium and long-term loans, mainly in the real estate sector. According to the roadmap, the rate will fall to 40% from 1 January 2019.

What makes HoREA believe that it is unlikely that the property bubble will remain under the control of the market. The association evaluates government institutions that have experience with the timely and effective use of tax and credit instruments, spatial planning and planning and investment policy for the project. school. Real estate companies, commercial banks, investors and consumers are smarter.

However, contrary to HoREA's vision, many experts have strongly warned about the cyclical nature of the real estate bubble, even pointing out the moment when the bubble might break. Some companies also plan to deal with the property bubble. Experts also propose solutions to prevent soil fever, that bad scenarios can occur.

Bank economist Nguyen Tri Hieu predicted that the real estate market would end up in a bubble if credit in real estate continued to flow. Credit growth now indirectly forms a real estate bubble.

According to Hieu, the sign of a bubble is on the market when real estate prices rise 100% within a year. The expert said the property bubble could break out in 2019, which is equivalent to the 10-year crisis on the market.

Meanwhile, deputy head of International Business – Marketing at Ho Chi Minh City University of Economics, Huynh Phuoc Nghia, has made it clear that the fear of a bubble in real estate can break between land fever occurred in HCMC and in many provinces across the country.

Nghia said that the land fever in Saigon continues to rise in the first months of 2018, although it spread in 2017 and forced the market to pile up real estate bubble.

He said that HCM City needed at least five measures to prevent negative reactions. These are: land tax, determination of the land price by the market for the imposition of taxes, limitation of the transaction time, tightening of the creditworthiness of land ownership, tightening of spatial planning. The final solution is to apply the unique mechanism of HCM City to land management.

Managing Director of an investment consultancy firm in the south of HCM City, it is worth noting that market parties often have a tendency to ignore the risk of air bubbles, because they can still take the Optimistic and expected growth momentum.

The expert said that the new property bubble would not follow the old rules from the past. At different times, the size of the market has changed a lot and the variables are increasingly unpredictable. That is why prevention is better than cure, setting up a defensive barrier ready to deal with the real estate bubble is still better than confirming that the bad has not happened yet.

According to Vu Le /

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