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Experts say land fever in Hanoi will not prolong   2009-06-17 - VietNamNet/VNE

Cash is now flowing from the stock market to the real estate market, but experts say this is just temporary. They say the land fever will not prolong for an extended period like in 2007.


The land price fever. . .


The price of land in Hanoi has been skyrocketing with sharp price increases of 60 percent in some areas. Houses in Ha Dong district and neighbouring areas are being hunted in particular, especially ones in Van Phu, Xa La, Van Khe, Le Van Luong or Highway 32 areas. The price is 10-30 million dong per square metre in these areas.


The land price fever has led to the price increases of apartments in new urban areas. Apartments in Cau Giay new urban area have surged from 17 million dong to 23 million dong per square metre. Apartments in Van Quan and Xuan Phuong apartment blocs have also risen from 15 million dong to 20 million dong.


A survey by local newspaper VnExpress showed that real estate is now the second-most attractive investment channel, after securities. Of 8,000 readers polled, 36 percent said they preferred investing in stocks. 27 percent chose real estate.


Experts believe that the cash is now flowing from the stock market to the real estate market as short-term investors are selling stocks to make quick profit. However, the experts believe that though these surfing investors are rapidly pouring money into real estate, they will withdraw money from the market just as fast.


Besides money from stocks, idle money among the public has also been going to the real estate market. Ngo Tri Long, a senior economist at the Market and Price Research Institute, said that a lot of people are choosing to inject money in real estate because they feel this investment channel is safer than other channels. The foreign currency market proves to be unstable, VND deposit interest rates are not high, while gold prices have been decreasing.


Long also said that real estate prices have increased because of the demand stimulus package. Some commercial banks now allow clients to purchase houses and pay in installments over 10-15 years.


. . . will not prolong


While admitting that the real estate market is now hot, experts believe that the fever will not continue for an extended period. The real estate market is believed will return to stability because supply will be profuse as some new products are set to hit the market.


Dao Dinh Thi, Director of Viglacera real estate trading floor, said: “Sale prices will decrease when supply becomes more profuse.”


Thi believes that the real estate market will not be as overly hot this year as it was in 2007 because investors have become more cautious. They will stop injecting money in real estate when prices increase to overly high prices.


“The stock market proves to be the most attractive channel, but the real estate market always has ups and downs. Investors won’t inject all their money in real estate. Real estate prices will be stabilised,” Thi said.

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