4 real estate investment recommendations not to be missed in 2019

General Director of Viethome Company, Nguyen Anh Dao, assessed that the real estate market in 2019 is no longer as easy for investors as in 2015 - 2018... 2019, the year of the Pig, will be the most challenging year in nearly half a decade.

This expert makes four recommendations for market participants to consider and be more cautious when deciding to "put their trust" in this investment channel this year.

1. If investing in a house, you should prioritize a small house.

Mr. Dao said that regardless of the purpose of buying a house: to live in (settle down), to rent out (exploit consumption), to save (accumulate assets) or to resell for profit, with the first house bought in 2019, do not be greedy for a big house. Especially young families with low income and insufficient cash flow, should consider buying a house with a moderate value within their affordability to ensure safety.

For the majority of Vietnamese people, a house is not only a place to live but also an accumulated asset and a measure of success. However, do not choose a big house because of pride, do not buy a house that is too luxurious based on your preferences, then lack it, leading to a lot of debt, which will make things difficult for yourself. Later, when you have accumulated enough and have paid a significant amount of money for the first house, that is the right time to change to a bigger house. A small house, low total value, easy to buy, easy to sell, easy to rent, is a safe and effective investment in 2019.

For investors who start buying a second home or more in 2019, the top priority should be high liquidity (easy to trade on the secondary market). The second priority is the ability to exploit good cash flow (easy to rent). However, rental prices in the market are under downward pressure due to the huge number of houses being handed over to the market.

Experts recommend caution when investing in real estate in 2019.

2. Be careful with financial leverage

What is the safe bank loan ratio when investing in real estate in the next 12 months is a question that many investors are interested in. With normal developments every year, real estate investors certainly have to use loans to participate in this game. However, the wind has changed direction in the year of the Pig because the real estate credit tightening policy has entered an important roadmap.

The move to tighten capital into real estate investment and reduce the ratio of short-term capital used for long-term loans will continue to reduce the money supply into this investment channel.

Therefore, investors need to consider before borrowing from banks to participate in the real estate market to avoid risks due to fluctuations in the credit market. With real estate prices having been pushed up quite high in some places, the price increase in those places will no longer increase as high as in previous years, even in some segments with oversupply, the possibility of price stability or gradual adjustment may occur. On this basis, if the investment is not correct and borrowing from banks with high rates can lead to great risks. The loan amount should not be higher than 40% of equity capital to balance benefits and risks.

3. Should invest in products with high market demand

2019 will be a special year for the real estate market, because with many events happening such as reviewing legal procedures, inspecting many projects, limiting the licensing of new projects... will limit the primary supply. However, in the suburbs and provinces bordering Ho Chi Minh City, the basket of goods is quite abundant. In the midst of a forest of goods, choosing which type of real estate to invest effectively plays an important role.

To ensure safe and effective investment, the segment for those with real needs will receive the most attention and be the first choice. Investors should be cautious with real estate whose prices have been pushed too high in virtual fevers, and avoid pouring money into places with too slow development speed (or more accurately, low real demand) but sky-high prices. Invest in segments with real needs to avoid unexpected risks of liquidity.

Continuously rising real estate prices can be a "trap" for investors.

4. Real estate prices are too high, it is a trap

Real estate investment in 2019 is very different from the period 2015-2018. The real estate market declined from 2008 to 2013, showed signs of recovery from 2014 and grew again from 2015 onwards. During the period 2015-2018, many land fevers occurred, causing the real estate price increase rate to be very high, with the peak in 2016-2017 and then slowing down, showing signs of slowing down more from 2018.

This development is partly due to the surplus accumulated by people after nearly a decade that was invested in the period from 2015 to 2018. The real estate price level in 2019 has been pushed up quite high from previous years. Old investors may take profits, new investors will be more or less cautious when investing.

In addition, a large part of people's savings have been poured into the real estate market for investment in previous years, so the amount of investment in 2019 will not be comparable to that of 2016-2017. In 2019, real estate prices will hardly increase as sharply as in previous years, and the higher the price, the more careful consideration must be given.