Vo Tri Thanh, former deputy head of the Central Institute of Economic Management (CIEM), said the macroeconomy has big influences on Vietnam’s real estate market. However, the market performance shows latent risks, especially in planning, monetary policy and legal areas.
He said economic forecasts show signs which are not favorable for Vietnam’s economy in general and the real estate market in particular. Thus, investors need to be cautious.
The world economy is predicted to slow down in the next two years, while Vietnam’s economy is believed to be affected by trade war activity.
In addition, changes in monetary policy which tighten capital flow to the real estate market will also have an impact on the market.
Nguyen Tri Hieu, a finance and banking expert, said the total outstanding loans of the national economy is VND6,800 trillion, of which 20% has been disbursed to the real estate sector.
Hieu describes the situation as ‘extremely worrying’. The state doesn’t have long term monetary policy for the real estate market, while the State Bank has tightened lending to real estate sectors.
“If the cash flow continues to go to the real estate market and real estate prices increase by 100% within one year, risks will occur,” Hieu said, adding that current credit growth would lead to a real estate bubble.
“It is highly possible that a real estate bubble will occur by 2019,” he said.
Meanwhile, other experts are optimistic about real estate market performance.
Duong Thuy Dung from CBRE Vietnam said the liquidity in the real estate market has been stable in recent years. About 40,000 new apartments open for sale each year, while 30,000-35,000 apartments are sold.
Dung said the price increase can only be seen in some market segments in certain areas, which do not reflect the situation of the whole market.
The sharp price increase of 40-60% only occurs in some areas in HCM City. Meanwhile, in the entire market, the price has increased by 3-5% on average in nearly all market segments. The areas with good infrastructure have seen prices increase by 7-14%.
Tran Dinh Thien from the Vietnam Economics Institute and Thanh from CIEM said the current situation is not too worrying. However, they think it would be better to be cautious about possible risks.