The State Bank of Viet Nam would raise solutions to tackle credit congestion into the real estate sector to ensure the healthy and stable development for the market, Deputy Governor of the State Bank of Viet Nam Dao Minh Tu said recently.

Tu said at the conference to implement tasks in 2023 of the banking sector early this week that the central bank planned to organise workshop about credit for the real estate sector to clarify the responsibilities of the banking industry, real estate management agencies and project developers and how to promote the healthy and stable development of the market.

Being a member of the Prime Minister’s working group about the real estate sector, Tu said that he found that real estate companies were encountering many difficulties and problems.

The working group would continue to evaluate the situation and report to the Prime Minister about short-term credit solutions for the market, Tu said.

According to Ha Thu Trang, deputy director of the Credit Department, the central bank had issued many policies to remove difficulties for the real estate market.

Specifically, the central bank asked commercial banks to meet the borrowing demand for home purchases of residents, industrial property projects and almost-complete housing projects with the ability for repayment, adequate legality and good liquidity.

On December 5, the central bank raised the credit growth cap in 2022 by around 1.5-2 per cent.

On December 14, Prime Minister Pham Minh Chinh asked ministries and relevant agencies to focus on removing difficulties for the real estate market and housing development.

The State Bank of Viet Nam was in charge of monitoring the loan provision to the eligible subjects in accordance with the established laws.

Priority was asked to be placed on social housing projects, housing projects for workers, reasonably priced commercial housing projects and real estate products for production, business and social security with high efficiency, ability to repay and promote development.

Still, in a recent document sent to the Prime Minister and the State Bank of Viet Nam on December 22, the HCM City Real Estate Association said that real estate developers and home buyers were facing with a lot of difficulties in accessing banking credit because of the failure to meet credit standards of banks.

Therefore, the association proposed credit standards to be loosened in the short term, specifically to the end of 2023 to support real estate developers and homebuyers.

The association suggested that bonds issued by real estate developers be used as mortgage assets for loans.

The association also proposed a support of 2 per cent interest rates for those buying homes worth less than VND2 billion.

Better capital inflow?

According to Tran Kim Chung, former deputy director of the Central Institute for Economic Management, the capital flow into the real estate market was expected to increase in 2023.

The source would come from the lifting of 1.5-2 per cent in credit growth target, the securities market, the recovery of the bond market, remittance, individual investors and foreign direct investment.

Other positive factors included the gradual recovery of real estate enterprises, increases in merger and acquisition activities, and the participation of new strategic investors and developers.

Chung said that it was necessary to raise policies to promote the credit flow into the real estate market.

In the long term, the legal system related to the real estate sector must be improved together with improving the transparency of the market by launching indices such as land price index and housing prices index.

Pham Hong Chuong, president of the National Economics University, said that the progress of approving credit to eligible projects should be accelerated. The granting of credit beyond the allowable limit should be permitted for key national projects and projects which played important roles in socio-economic development.

Assessment of the debt repayment ability of borrowers, including real estate businesses, should be carried out to restructure debts appropriately, Chuong said.

It was also necessary to issue lending criteria for different types of real estate products to avoid credit concentration on high-end segments and promote the capital flow into social housing projects and commercial housing projects with high efficiency. — VNS