Will there be another real estate bubble?

Real estate trading floors are very busy these days in HCM City. People seek to buy houses for accommodation, investment and lease. Real estate developers say they are satisfied about the purchasing power with the high numbers of customers registering to buy apartments right after they put products on sale.

Le Thanh in Binh Tan District said he decided to buy a two-bedroom apartment in district 9, with delivery in July.

Thanh said the price was reasonable, and the payment method flexible. He will pay 25% of the apartment’s value in advance, and the rest within 25 years. 

It is now easier for Saigonese to buy houses and apartments. They don’t have to queue up for lucky draws as they did some years ago, while they just have to pay about 30% of the apartments’ value first.

Phuc Khang, a real estate firm, confirmed that demand was rising rapidly. A Singaporean investment fund alone has bought 30% of the apartments at its project near Dam Sen Park.

Meanwhile, Thuduc House said 90% of apartments of a project put on sale since December 2015 in district 9 have been sold.

According to Nguyen Nam Hien, CEO of Hung Thinh Land, the company sold about 5,000 apartments in 2015, double the year before.

“The demand has increased rapidly. Meanwhile, commercial banks are now willing to provide preferential loans to house buyers,” he explained.

A report of CBRE, a real estate service provider, said that 36,000 real estate products were bought in 2015, a sharp increase of 98% compared with 2014, the highest year-on-year growth rate so far.

The two ‘hot spots’ in the southern and eastern parts of HCM City witnessed the highest percentages of successful transactions, which account for 37% and 57%, respectively.

Also according to CBRE, the real estate price in 2015 increased by 4-5% on average, while projects in advantageous positions saw prices increase by 10-15%.

Le Hoang Chau, chair of the HCM City Real Estate Association, believes that the demand and prices would continue rising in 2016 as the market will receive more foreign and Viet Kieu buyers.

“The price may increase by 3-5% in some areas,” he said.

However, Chau denied that a bubble would appear in the market.

Chau confirmed the increase in the number of high-end projects in the last year, but said the market demand was also high. Therefore, oversupply will not occur.