Monday, October 2, 2023 5:36:30 PM - Markets open
VN-INDEX 1,155.25 +1.10/+0.10%
HNX-INDEX 236.72 +0.37/+0.16%
UPCOM-INDEX 88.69 -0.09/-0.10%
Domestic real estate market needs credit solutions: experts
Vietnam News - 4/20/2023 4:49:43 PM
 (0 ratings. You must sign in to rate.)
In an effort to address the ongoing challenges faced by the domestic real estate market, an approach encompassing legal, administrative, and financial solutions is urgently required, particularly in the realm of credit.
This was expressed by Prof. Ngô Trí Long, leader of the Ministry of Finance's Price Research Institute, during a seminar on the revitalisation and sound development of capital for the domestic real estate sector. The event, held on April 19, was organised by the Vietnam Financial Consulting Association (VFCA).
Dr. Lê Minh Nghĩa, VFCA's deputy chairman, said during the discussion that the majority of capital directed towards the real estate market is substantial in scale, and typically takes the form of medium to long-term investments. However, for years, Việt Nam's property market has been heavily reliant on bank credit, amounting to approximately VNĐ2.6 quadrillion, and constituting nearly 20 per cent of the nation's total capital.
In light of this, recent endeavours have sought to diversify capital sources, tapping into alternative channels such as equities, bonds, and foreign investment, with a view to fostering recovery and growth within the real estate market.
However, according to Nghĩa, from the last six months of 2022, the real estate market and businesses have faced many difficulties, especially in terms of capital liquidity and legal procedures.
Besides that, lending interest rates, petrol and oil prices, building material prices and labour costs have increased, leading to higher production costs for real estate businesses. Those factors have caused many projects to stop.
Especially, the tight control of credit by the State after the mistakes of real estate businesses in issuing individual bonds and manipulating stock prices have made it difficult for real estate businesses in approaching capital, said Nghĩa.
To remove those difficulties in credit for the real estate market, Long said that it is necessary to focus credit on eligible and feasible real estate projects and the housing segment that the market has real demand for.
Now, the State Bank should consider classifying property projects and investors to stabilise the market as well as the psychology of homebuyers, Long said. 
The segment that needs difficulties removing right now is social housing products, he said.
The State needs to control credit risk for the real estate segment, and also follow granting of credit for property enterprises and projects.
Other factors are to improve the quality of the statistical system with regular updated information on real estate projects with large outstanding loans, and to assess the real estate market and investors, aiming at having suitable credit solutions.
In addition, the State needs to implement a credit package of VNĐ120 trillion for social housing, a programme on providing loans for developing social housing and worker housing projects, and upgrading or re-building old apartments.
The banking system should have solutions to encourage businesses to develop social housing projects and housing for workers.
Long said that in the past three years, the COVID-19 pandemic caused the real estate market to fall into a difficult situation. Many real estate businesses were inefficient and had shortages of capital.
“The scale of Việt Nam's real estate market is not large compared to other countries in the region, but more than 70 per cent of real estate investment capital is bank loans, and 65 per cent of collateral to get the loans is real estate,” Long said.
He also said that after a period of massive lending, banks and credit institutions are now more careful with real estate projects.
Besides that, in 2023, real estate businesses are under great pressure from the maturity of bonds.
According to Long, the number of bankrupt real estate businesses has increased by nearly 40 per cent in the past year.
According to incomplete statistics from the annual financial reports of real estate companies listed on the stock exchange, the value of real estate inventories and unfinished construction projects by the end of 2022 had a very strong increase.
“This means the businesses do not have more capital to deploy further. Without timely and effective solutions, the real estate market may slide into crisis, adversely affecting the goal of maintaining macro-economic stability and social security," Long said.
Therefore, the Government has issued decrees and resolutions to remove difficulties in capital for the real estate market.
Those are the Government's decrees on the offering and trading of individual corporate bonds in the domestic market and the offering of corporate bonds in the international market.
In addition, there is a project on the development of 1 million social housing houses by 2030 and Resolution No. 33/NQ-CP of the Government on solutions removing and promoting the development of a healthy and sustainable real estate market.
According to Nghĩa, this is the Government's determination to remove obstacles and promote a healthy and sustainable development of the real estate market, contributing to the process of socio-economic recovery and development after the COVID-19 pandemic. VNS
Read original article here
Newer News
11/09 Hải Phòng has many advantages for strong development of property market
09/09 Residential property for digital nomads could be a potential segment
24/07 Hà Nội's apartment prices increase sharply despite market gloom
18/07 Hà Nội sees development prospects of real estate market in East: experts
29/06 Industrial real estate companies to benefit from shortage of land fund
17/06 Industrial real estate picks up steam
17/06 Trillions are expected to move into property market
11/05 M&A to pick up in property market
07/05 Housing supply expected to increase in the future with new credit package
Older News
13/04 Slowing realty market hinders big banks in bad debt recovery
29/03 Government calls for broad-based measures to help realty sector
27/03 Strong signals of positive year for industrial real estate market
27/03 A lower rate might give buyers more confidence to make purchases and improve market attitude in general as many potential buyers are sitting on the fence waiting for prices to drop further.
14/03 Gov’t removes roadblocks for real estate market, firms expect drastic actions
14/03 Real estate market won’t recover until late 2024: experts
06/03 HCM City condo supply down in 2023
03/03 HCM City to remove challenges facing 116 property projects
16/01 Experts call for favourable policies to help real estate
16/12 Domestic real estate market boom unlikely in 2023
Newsletter Signup
Top Stories
SSC to prohibit the use of automated order placement
Shares gain ground on the back of large-caps
Market expected to perform positively on Biden's visit
Stock market to regain growth momentum in H2
CPI increases 0.88 per cent in August
Market Update
Last updated at 3:05:02 PM
VN-INDEX 1,155.25 +1.10/+0.10%
Real-time chart
Top 5 Actives
Top 5 Gainers
Top 5 Losers
My Favorite Quotes
Your most recently viewed tickers will automatically show up here if you type a ticker in the Get Quotes box on the top of the page.
Company Research
Type in the symbol above for thorough background information, key statistics and financial information.
Stock Sectors
We continuously improve our services, here are the latest updates...
Allow you to monitor a customised group of securities. You can set up multiple Portfolios to help you better manage your investments.
Trigger Alerts
Get up-to-date alerts delivered directly to your email address.
Stock Screener
Allow you to filter the market and find exactly what sort of company you are looking for.
Live Terminal
Get instant access to FREE REAL-TIME streaming quotes for hundreds of stocks from HOSE, HNX and UPCOM exchanges.