HOUSING PRICE RISES DESPITE LOW-VOLUME TRANSACTIONS (PART 1)

HOUSING PRICE RISES DESPITE LOW-VOLUME TRANSACTIONS (PART 1) 22 August

Home sales have been recently decreased dramatically, against the normal rules, the housing price still goes up.

From the beginning of the second quarter of 2021, Vietnam has to confront the fourth wave of COVID-19 outbreak. It claimed the title of the most dangerous, widespread, long-lasting resurgence, which affected considerably to the whole economy and real estate market.

Since the pandemic started hitting, the absorption rate has fallen to the bottom due to the high primary supply on the market, compared the first half of 2021 with the same period of 2020 and 2019 (mostly the previously unsold inventory).  

Generally the civilian incomes have been reduced because of the impact of the pandemic. According to the macroeconomy fundamentals, the demand line has to move to the left, meaning that the consuming demand and price continue to shrink.  

In fact, market witnessed the anomalous signals in opposition to rules and principles, specifically: real demand drops, shown at decreased transaction volumes, but total market funds of investing in real estate indicated the stronger movement.

The interpretation of this phenomenon could be that the large proportion of funds were withdrawn from other fields, markets (stock, foreign exchange, weaken economies) to pour into real estate market to find opportunities “The demand line is pressed to move to the right, which means the price or productivity rises”. In reality, there are signals exhibiting the downturn of the production. The real amount of money has flowed into the market is enormous. The shortage of supply contributes to the climbing housing price, which make the housing boom in the last February and March.

(To be continued …)

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