Tightening real estate loans can curb speculation, stabilize market: experts


The tightening of real estate loans by commercial banks can curb speculation, help the market stabilize and avoid bubble bursts, some experts say, but others warn of downsides.
Techcombank, Vietnam’s largest private lender by assets, halted disbursement of real estate loans from March 25 to April 1.

Another private lender, Sacombank, has stopped offering loans to the real estate sector from late March to June 30. It said it will focus lending on the manufacturing sector and not offer new credit on mortgaged properties.

Those are a few steps that lenders have taken to increase control and lower loan limits for the real estate sector.

Experts expect further tightening measures to be applied from mid-2022 to stabilize the housing market as prices skyrocket on recovering demand and the specter of high inflation and speculation looms large.

Huynh Phuoc Nghia, senior consultant at advisory firm GIBC, told VnExpress that raising the bar for real estate loans would help scrutinize money flow in the market and cool down the housing bubble.

Those who invest with idle funds and firms with high sell-through rate will be less affected by these measures, but speculative traders and developers with large, slow-selling inventory may suffer, he said.

Apartment projects in southern Ho Chi Minh City.

Nghia also called for closer monitoring of bond issuance by real estate companies, saying this practice has caused some market distortions.

The tightening of loans and bonds issuance in 2022 could lead to a significant turning point in the near future, he said.

Le Quoc Kien, an experienced property consultant, said loans for purchase of land had the highest speculative possibility.

Raising the bar for land loans will force investors to use their own funds, or shift from speculative trading to long-term investing, which would certainly stabilize the market, headed.

The CEO of a HCMC-based property firm said the tightening of loans has been planned in advance, so most investors have not been taken by surprise.

But, these moves may pose a stiff challenge to real estate investors and developers, given their high dependence on loans, he said.

While speculation may be curbed to an extent, property firms will have to recalculate their business plan and sell off assets quicker to reduce risks, as market liquidity may decline, he added.

Continuously rising real estate prices since the beginning of the year have triggered a land fever in many localities across the country, attracting massive investments.

Bank credit for real estate increased by more than 5 percent in the first quarter over the previous quarter. In March, it rose by more than 5 percent year on year.


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