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Earth fever cycle, freezing repeats after 7 years


Nearly three decades of real estate has seen four land fevers and three freezes with a cycle that repeats every 7-8 years, according to Propzy.

Propzy Company has just published a study on the Vietnam Real Estate Cycle for 28 years (starting from 1993 to present) with alternating repetitions of land fevers every 7 years and closing milestones. ice appeared after 8 years.

The research of this unit showed that in the period 1993-1994, the real estate market had the first land fever. After this land fever, from 1995 to 1999 the market froze for the first time. It was not until 7 years later, ie in 2000, that the second land fever wave appeared in the market and this fever lasted for the years 2001-2002.

Aftershocks of the second land fever caused the market to freeze for a long time, starting in 2003 and the crisis lasted until 2006. The gap between the first and second market freezes the second is 8 years.

The third land fever took place in 2007-2008, but during the next 5 years, from the milestone 2009 to 2013, the market froze for the third time. This is the longest freezing period in the past three decades.

The real estate market thawed at the end of 2014 and since then the fourth heat wave that lasted until the beginning of 2019 has begun to slow down. Signs of fever reduction appeared from the end of 2018 and gradually became evident in the years 2019-2020 with the deceleration of the market getting stronger.

Real estate market in the center of Ho Chi Minh City. Photo: Quynh Tran

According to Propzy, in the nearly 30-year history of establishment and development, the fledgling real estate market has witnessed heat waves – freezes and these cycles are closely related to the stock market. Specifically, during the second land fever period in 2001, the Vn-Index peaked at 571 points and then the stock index adjusted continuously in 2003-2006 when real estate froze.

In 2007, when there was a third land fever, Vn-Index peaked at 1,170 points and Vn-Index corrected sharply when the market froze for the third time. It had to wait until the end of the fourth land fever cycle before the VN-Index peaked at 1,204 points. By the third quarter of 2021, when the VN-Index reaches a peak of 1,400 points, it can signal a new wave gradually forming in the near future.

However, the note of VnExpress shows that the real estate market is wobbling strongly during the fourth Covid-19 epidemic (early May 2021 to present). Market liquidity was poor in many segments. The rental properties are vacated in large numbers, residential, commercial and consumer real estate is sluggish, many investors and home buyers are insolvent, real estate businesses have difficulty with cash flow.. It is difficult for the market to reverse from deceleration to fever during the complicated and unpredictable epidemic period.

Before Propzy, Savills also published a report on 25 years of ups and downs of Vietnam’s real estate market (period 1995-2020). In the third quarter of 2020, Mr. Neil MacGregor, General Director of Savills Vietnam, said that since the mid-1990s, Vietnam’s real estate market has had periods of hot growth. It was followed by a period of decline, crisis, freezing, then a strong recovery and by 2020 it was slowed down due to the impact of the epidemic.

Mr. Neil MacGregor divided the recent tumultuous period into 4 periods of ups and downs. In the period 1995-1998, the real estate market was still in its infancy, starting to warm up and increasing rapidly.

It was not until 1998-2008 that the market got used to the land fever. State policies also contribute to boosting the real estate market and blowing up the price fever. Transactions and house prices in these years both increased while real estate became an investment channel that attracted many classes of participants. With two housing booms in 2001-2003 and 2007-2008, housing prices increased many times, completely beyond the reach of low- to moderate-income people in big cities like Hanoi. or Ho Chi Minh City.

In the period 2008-2018, the market welcomed a decade of unprecedented volatility. During this period, real estate witnessed all stages of the cycle of crisis – recovery – boom – deceleration (signs of crisis) appearing in the same decade. In mid-2008, the economic cycle once again plunged, stemming from the global financial crisis, followed by a recession of the real estate market. At this time in Vietnam, housing prices plummeted, with an estimated 30-40% reduction in just a short time.

In the period of 2018-2020, the deceleration momentum is stronger and more challenging. Since 2018, the deceleration of the real estate market has gradually revealed itself with the supply decline extending into 2019-2020, property consumption has shown signs of slowing down and slowing down. This deceleration is due to the mass review and legal examination of real estate projects, which prolongs the time to prepare procedures for real estate projects. At the same time, Covid-19 complicatedly developed like a blowback, making the real estate market move more slowly than before.

By mid-September 2021, entering the final weeks of the third quarter, experts predict that the fourth outbreak of the Covid-19 epidemic is pushing the real estate market to face the worst scenario in the past 10 years. It is unlikely that a heat wave will occur if the disease is not controlled.

Trung Tin



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