Source: NYTimes eXaminer
The huge
decrease in the real estate sale in Vietnam has recently drawn attention of
many analysts and policy makers as it has accelerated the concern that the real
estate bubble has started to deflated and may burst in near future. This sombre picture of the real
estate market currently has posed significant impact on the economy of Vietnam
in general and individual investors’ wealth in particular. One of the main reasons which have lead to the occurrence of the real estate bubble is the investment behaviours of
Vietnamese investors. Almost investors have focused on traditional investment
channels, especially real estate because of the following reasons: i)
they are familiar with this kind of investment; ii) it is easy to approach;
iii) there are not so many financial instruments available to them.
Furthermore, investors are usually influenced by the "crowd
effect", they tend to follow the success of other investors rather than
studying the market to make investment decisions. With the rise of the number
of vastly wealthy people whose most money comes from investing in real estate,
more and more people engage in trading real estate. Apart from investors who have used their savings and pensions to invest and just account for a small proportion, many investors have
borrowed money from the bank to invest in real estate with the hunch that the price
would keep rising in future. Consequently, the real estate prices are being
pushed far way from the real value and manipulated by speculators. However, only one objective reasons cannot creat such a huge mess in the real estate market, it is because thanks to the assistance of a number of other subjective factors, the bubble gradually has become bigger and bigger and now
when the government has imposed policy to tighten the access to bank credit, it
may burst in any time. In the next post, I am going to clarify the determinants which have taken part in creating the real estate bubble in my point of view.
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