Credit tightening going some way to avert real estate bubble
Credit tightening going some way to avert real estate bubble
The tightening of credit poured into the real estate sector in 2022 will contribute to preventing speculation and real estate bubbles, but it may not cut off the fever of the market immediately.
According to the State Bank of Vietnam (SBV), tightening real estate credit has restricted speculation and helped the market become more transparent.
The SBV underlined that the move only aims to restrict segments with a high risk of speculation in major projects, instead of impeding investment flow in real estate.
In its latest strategy for the banking industry, the SBV said credit must be channelled into production and business industries to create positive impacts on socioeconomic development. It also urged banks to refrain from providing credit to businesses operating in risky areas, such as real estate, securities, corporate bonds, or build-operate-transfer and build-transfer transport projects.
Tran Khanh Quang, general director of Viet An Hoa Real estate Investment JSC. said that inflation combined with banks tightening credit to real estate, in addition to some instances of bond issuance fraud, are factors that have a great influence on the market.
According to Quang, real estate businesses will have to restructure their portfolios to bring to the market more suitable products. Buyers, meanwhile, will also have to be more cautious about the developers’ capacity. “I think in the next 2-3 months, the real estate price hike will halt and gradually go down,” said Quang.
Large real estate developers are facing difficulties to access loans from banks and issuing bonds to the market, Quang added, while developers try to find solutions to split properties and reduce total values.
“I expect that house prices on the market will go down in late 2022. Moreover, when buyers have a wait-and-see attitude, prices of real estate will surely go down,” Quang said.
According to Nguyen Quoc Anh, general director of batdongsan.com, residential, industrial property, and landed houses are fields that will thrive in the coming period.
Housing real estate’s recovery is being driven by supply and demand factors, lower interest rates, and a more complete legislation framework. Especially, the government’s national housing development strategy for 2021-2030 has pointed out that developing affordable housing products for low- and middle-income people is a key strategy.
The industrial property segment, meanwhile, could be the most positive and stable bright spot in the real estate market in 2022. There is currently an increasing demand for production and business premises, including real estate serving logistics activities to meet the ambitions of international and domestic manufacturers. Meanwhile, green and eco-industrial zones will be developed in 2022 and beyond, and will be of special interest to investors. At the same time, there will be an increasing demand for cold storage to serve temperature-sensitive products such as vaccines, cosmetics, pharmaceuticals, food, and much more.
“The landed house segment will also continue to improve, especially in projects which were zoned and located where infrastructure development is accelerated,” Quang explained.
Real estate credit currently accounts for about 18-20 per cent of the total outstanding loans of the economy. Lending growth in this sector has also gradually cooled down, from over 26 per cent in 2018 to 12 per cent last year.
