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Land fever to recur in 2011?

In Uncategorized on December 16, 2010 at 9:25 pm

Land fever to recur in 2011?

QĐND – Thursday, December 16, 2010, 21:4 (GMT+7)

Experts believe that sooner or later a land fever will occurr , , and this should not be seen as a spontaneous phenomenon, but as the result of the lack of appropriate economic regulations.

The demand for real estate increasingly high

As Vietnam urbanizes, more and more well-off families use their savings to purchase houses and land in Hanoi, HCM City and other big urban areas

With a population of 86 million, Vietnam ranks 13th among 218 countries and territories in the world, while its area ranks only  64th. With 260 people per square kilometer, Vietnam’spopulation density is double that of other Southaast Asian countires and five times higher than the average figure in the world. However, urbanites only account for 30 percent of the total population.

Analysts believe that together with the economic growth, the percentage of urbanites would increase from 30 percent to 50 percent in the next 10 years.

Moreover, the growing prosperity of the national economy has been attracting overseas Vietnamese and foreigners. More and more overseas Vietnamese have been returning to Vietnam, and many of them want to settle here. The number of foreigners working for representative offices and international institutions has been increasing, also raising the demand in the real estate market.

Once the number of urban residents and the living standards standards increase, the demand for accommodation will grow accordingly. Sincethe land fund is limited, this pushes the price of the real estates. This explains why the market regularly witnesses land fevers.

The “periodic motion” of the real estate market

Since 1993, the real estate market has witnessed four  instances of land fever. The first one occurred in 1993-1994, the second one in 2001-2002, the third in late 2007 and the latest in early 2010.

One can see that there was a long, 6-7 year period of time between the first and the second, with each lasting two years. Meanwhile, the time between the two last fever attacks was shorter and their duration was also shorter. The third land fever in 2007-2008 lasted only six months, while the fourth lasted four months only.

This was because of the timely intervention from the State. the State, which holds big areas of land and a large accommodation fund, and other financial tools, successfully cooled the fever.

Another factor that affected the real estate market in Vietnam was the global financial crisis in early 2008. After 2010, when the economic recession bottoms out, a new period of recovery and price increases will begin.

Dr. Nguyen Thac Hoat, a finance expert, believes that a recurrence of land fever is inevitable.

The influences of macroeconomic factors

Contrary to most experts’ predictions , Nguyen Tho Phung, a real estate expert at Vietinbank, thinks that the land price fever is not very likely to happen, at least in the first half of 2011.

The main reasonbeing, i that the State Bank of Vietnam has requested commercial banks to limit the loans to the real estate sector. Besides, once the plan for Hanoi development by 2030 is approved, many new real estate projects will be implemented.  the land price fever? will not occur, once the supply is profuse.

Dr. Nguyen Van Nam, former Member of the Prime Minister’s Research Team, said that in general, before the Communist Party’s Congress, all activities in the national economy seem to go more slowly.

The new period forof the national economy will begin after January, when the Communist Party’s Congress finishes.

The goods prices and inflation may increase again. The real estate prices may also increase, because the demand for real estate is becoming higher and higher, not only from those, who need accommodation, but also from those who want to save their money in assets.

Source: VNN

Source: QDND

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