Many banks have tightened credit for the real estate sector, which is evident in outstanding loans and higher interest rates but real estate supply is still increasing.
The Bank for Investment and Development of Vietnam (BIDV) has raised interest rates for home loans by 0.7-0.9 percent per annum, according to Thanh Nien newspaper. BIDV’s current preferential interest rate for home buyers in the first 12 months is 8.5 percent per year while the rate for the following years is the average deposit rate plus a certain percentage.
Do Minh Toan, general director of Asia Commercial Bank (ACB), said the bank is restricting real estate loans, which currently account for less than 10 percent of the bank’s total outstanding loans.
“We target customers who buy their first or second house and pay off the loans using their monthly wages while refusing individuals and businesses who buy houses and apartments for speculative purposes,” Toan said.
Nguyen Hoang Minh, deputy director of the State Bank of Vietnam (SBV) branch in HCM City, said real estate loans of banks nationwide account for 10.9 percent of total outstanding loans at present, a slight increase compared to end-2017. The lending rates are also higher than that of other sectors, ranging from 9 percent to 12 percent per annum.
According to the National Financial Supervisory Commission (NFSC), real estate and construction loans account for 16.1 percent and consumption loans 18.3 percent of the country’s total outstanding loans, meaning more than VND2,000 trillion (US$87.75 billion).
Notably, housing supply is increasing despite tightened real estate lending requirements. Dat Xanh Group said it sold more than 22,100 units last year and will launch another 28,000 units this year.
After staying muted on the market last year, Novaland Group has plans to come back by launching a number of projects in eastern HCM City. Hung Thinh Corp. will launch some 12,000 units while many other real estate developers have plans to expand their presence in the real estate market.
Le Hoang Chau, chair of the HCM City Real Estate Association (HoREA), said real estate firms foresaw the tightening situation and have taken appropriate measures, like cooperating with foreign partners to expand their business and market reach.
Nguyen Du Luc, chair of Hung Loc Phat Co Ltd, said in addition to shaking hands with foreign partners, domestic real estate developers have been more focused on their target market segments. According to Luc, most recent projects are sold out, showing that housing demand remains high.
However, some real estate experts said the increased supply and credit tightening policy will affect the real estate market. Real estate companies will have to lower the prices and launch more promotional programmes and better after-sale service to lure buyers.
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