What is the real estate cycle? Why hold the real estate cycle?….and many questions related to the real estate market cycle will be answered in this article. Follow now if you are an investor, broker or interested in this field!
What is the real estate cycle?
There are many different definitions of the real estate cycle, but in general, the real estate cycle is the “lifecycle” of real estate. In particular, each cycle lasts from 7 to 9 years and goes through many stages. Including: Recovery – growth – boom – recession and freeze.
The cycle of increasing and decreasing Vietnam’s real estate over time
The real estate cycle in Vietnam fluctuates from the bottom and has peaked over the years. As follows:
1/ The first time Vietnam real estate peaked in 1994
At this stage, the country basically came out of the socio-economic crisis. Economic growth is high. Inflation slowed down. The economy changed from a subsidy mechanism to a market mechanism. Therefore, real estate has skyrocketed momentum and peaked for the first time.
2/ The second peak of real estate appeared in 2000
This is the period after Vietnam and the US signed the Bilateral Trade Agreement. After the impact of the regional financial and monetary crisis (1997-1998). At the same time, Vietnam real estate was also affected by the cyclical crisis and the 9/11 events in the US during this period. Therefore, after the peak, real estate continued to go down rapidly!
3/ The third peak appeared in 2008
This is the time when Vietnam joined the World Trade Organization (WTO), foreign direct investment (FDI) in Vietnam reached a record level of registered capital (US$71.73 billion). It was also the first year to surpass the $10 billion mark. Despite reaching a 3rd peak, real estate prices quickly went downhill when the financial crisis and global economic recession occurred at the end of 2008.
4/ The fourth peak took place in 2014
2014 was the time when the gold price fell deeply (24.46%) compared to the previous 10 years. Followed by it, real estate prices skyrocketed, reaching the 4th peak.
>>> What is the lesson learned?
With the above 4 peaks, the time of the real estate fever cycle , that is, from the old “peak” to the new “peak” is about 7 years on average. From 1994 – 2001 – 2008 – 2014.
Real estate is a sustainable and potential investment field. Especially when the land is packed with people like today. In fact, the demand for housing is increasing rapidly. Meanwhile, mangroves, sea encroachment, erosion increased much. Therefore, there is no reason for real estate to drop in value. In the long run, the problem of making the next top is quite possible.
Predicting Vietnam’s real estate cycle in the period of 2021 – 2023
According to a share from a leading real estate group president in Vietnam, the period 2021 – 2023 will have a new price increase cycle.
Due to the impact of the Covid-19 epidemic, real estate prices have dropped continuously throughout the period of 2020 to early 2021. Accordingly, many banks tend to reduce lending interest rates. By the beginning of 2021, the lending level has decreased to a very low level, which has a great effect on stimulating demand, reducing the pressure of provision costs for banks and reducing interest costs for customers.
In fact, the lower the loan interest rate, the higher the real estate investment. Not only customers with real housing needs find suitable real estate products but also attract a large number of investors. Along with that, savings interest rates fell, so many people turned to other directions such as buying real estate instead of saving as before.
Currently, banks and financial companies also launch many packages to stimulate demand for real estate. For example: Exemption or reduction of loan interest rates. The combination of financial advantages has helped people with low capital and high demand for home loans.
Along with that, there are loose monetary policies in the world that cause inflation to increase. As a result, real estate prices will also increase.
Therefore, according to the analysis of many real estate experts, it is possible that in the period of 2021 – 2023, real estate in Vietnam will set a new peak. The specific reasons are as follows:
1/ Domestic and foreign capital focus on real estate
Due to good anti-epidemic policies and stable economic development, a lot of foreign capital is pouring into Vietnam’s market. Along with that, many big players in Vietnam also take advantage of the slowing real estate market and invest in this field.
2/ Real estate investment “delicious piece of cake”
After a “temporary break” due to the Covid-19 epidemic, many investors have taken advantage of opportunities, existing capital and invested in real estate as a sustainable investment channel. Not investing in gold, stocks or any other investment channel.
3/ Compared to other investment channels, real estate is more sustainable
Right at the time of the epidemic, bank interest rates fell, other investment sources were precarious. Meanwhile, overall real estate prices are still in a downtrend. Therefore, real estate is still the channel worth investing in.
Many experts also predict the real estate cycle chart will “peak” in the coming years. When the epidemic stabilizes, the situation of domestic investment increases sharply, foreign capital pours into Vietnam large, companies and foreign capital will create a big wave in Vietnam. And the cycle of Vietnamese real estate easily reached its 5th peak.
However, that does not mean low risk
However, real estate investors should also consider carefully. Take the investment wave wisely. Calculate and be careful. Limit investment risks by choosing projects with legal standards. In addition, projects are worth investing in when there are reputable investors and high profitability. Instead of investing in surfing, you should invest for the long term during this time.
Above is our share about the current real estate cycle in Vietnam. Don’t forget to visit AequitasAudit.com if you are looking to buy high-class, prestigious, good-priced real estate projects to settle down or invest in this period.
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