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28/12/2024, 12:00
Capital flow into real estate should not be blocked
Some banks have announced to stop providing real estate loans, and the corporate bond channel to attract capital for real estate has also been tightened. Faced with this situation, experts raised many financial and capital solutions to reduce risks and develop a sustainable and stable real estate market at the seminar on "Controlling capital into real estate - Policy and impact" held by the Ministry of Construction, on May 11, in Hanoi.
People are introduced to an apartment project in Ho Chi Minh City. (Photo: SGGP)
Suitable credit policies needed
There are different views on the impact of policies on controlling capital in the real estate market. Besides the opinion that credit control is necessary, many experts assert that these policies may backfire because real estate is the consumption market of hundreds of products from other manufacturing industries and creates jobs for millions of workers every year. It is forecast that several enterprises will continue to face difficulties if they cannot access capital for operation. Housing prices may escalate, and people's access to housing will decrease.
Dr. Can Van Luc, a member of the National Monetary and Financial Policy Advisory Council, raised the question of what will happen if capital flows are blocked for real estate enterprises. Whether the market heat is cooled down, or risks are controlled better? Or it will increase the imbalance of supply and demand; the project may be unfinished; the liquidity of the real estate market will decrease; bad debts will increase, and the economic recovery momentum will decrease?
Mr. Luc said we need to approach and develop a more balanced and harmonious financial market, create development but still control risks, direct the capital flow instead of obstructing it; focus on regulating supply and demand; at the same time, it is necessary to have regulations on grouping real estate segments to have appropriate credit and capital policies.
With the same concern, Mr. Le Hoang Chau, Chairman of HCMC Real Estate Association, said that the roadmap to limit credit in the real estate sector is necessary, but this progress should be reduced until the end of 2023. Similarly, Mr. Nguyen Van Dinh, the Vietnam Real Estate Association, suggested that credit policies should not be tightened. Instead, there should be strict control policies for projects with problems related to speculation, hoarding land, and inflating prices, and the rest should be promoted and encouraged.
For corporate bond issuance, representatives of businesses have proposed the Government consider amending Decree No.153 on corporate bond issuance to control the quality, properly assess the capacity of enterprises, and avoid the situation of issuing corporate bonds to defraud investors. At the same time, investment funds need to be established soon for enterprises to access.
Problems to be solved soon
Mr. Nguyen Duc Kien, Head of the Prime Minister's Economic Advisory Council, expressed the wish that enterprises would provide more specific information about credit contracts signed with credit institutions and now have been stopped funding according to the circular of the State Bank of Vietnam on the restriction of funding in the real estate sector. Mr. Kien affirmed that the opinions of businesses would be the basis for reporting to the PM to work with the SBV to direct the commercial banking system to solve entanglement.
Mr. Kien also stated that it is necessary to protect the interests of investors and avoid the risk of system breakdown. With the same point of view, Mr. Tran Dinh Thien said that if the real estate trading activity is criminalized, as currently, big investors will lose all opportunities and motivation and even withdraw from the market. Therefore, the criminalization of relationships in the real estate sector must be actually clear.
Information from the seminar also revealed that, at present, the SBV has not officially requested credit institutions not to lend more than 80 percent for real estate investment and trading. Some banks and credit institutions have recently suspended disbursement because they have run out of credit growth limit in the first quarter. Some projects and investors face legal problems and have to stop. Therefore, this situation occurs locally but not in many credit institutions.
According to the Ministry of Construction, in 2021 and early 2022, the supply of real estate in localities across the country is limit ed and tends to decrease significantly. Especially, there is a shortage of social housing and housing for workers and low-income people. At the same time, housing prices have increased strongly compared to people's income. Therefore, removing difficulties in the capital is also a solution to promote and increase supply for the market and reduce real estate prices.
There are different views on the impact of policies on controlling capital in the real estate market. Besides the opinion that credit control is necessary, many experts assert that these policies may backfire because real estate is the consumption market of hundreds of products from other manufacturing industries and creates jobs for millions of workers every year. It is forecast that several enterprises will continue to face difficulties if they cannot access capital for operation. Housing prices may escalate, and people's access to housing will decrease.
Dr. Can Van Luc, a member of the National Monetary and Financial Policy Advisory Council, raised the question of what will happen if capital flows are blocked for real estate enterprises. Whether the market heat is cooled down, or risks are controlled better? Or it will increase the imbalance of supply and demand; the project may be unfinished; the liquidity of the real estate market will decrease; bad debts will increase, and the economic recovery momentum will decrease?
Mr. Luc said we need to approach and develop a more balanced and harmonious financial market, create development but still control risks, direct the capital flow instead of obstructing it; focus on regulating supply and demand; at the same time, it is necessary to have regulations on grouping real estate segments to have appropriate credit and capital policies.
With the same concern, Mr. Le Hoang Chau, Chairman of HCMC Real Estate Association, said that the roadmap to limit credit in the real estate sector is necessary, but this progress should be reduced until the end of 2023. Similarly, Mr. Nguyen Van Dinh, the Vietnam Real Estate Association, suggested that credit policies should not be tightened. Instead, there should be strict control policies for projects with problems related to speculation, hoarding land, and inflating prices, and the rest should be promoted and encouraged.
For corporate bond issuance, representatives of businesses have proposed the Government consider amending Decree No.153 on corporate bond issuance to control the quality, properly assess the capacity of enterprises, and avoid the situation of issuing corporate bonds to defraud investors. At the same time, investment funds need to be established soon for enterprises to access.
Problems to be solved soon
Mr. Nguyen Duc Kien, Head of the Prime Minister's Economic Advisory Council, expressed the wish that enterprises would provide more specific information about credit contracts signed with credit institutions and now have been stopped funding according to the circular of the State Bank of Vietnam on the restriction of funding in the real estate sector. Mr. Kien affirmed that the opinions of businesses would be the basis for reporting to the PM to work with the SBV to direct the commercial banking system to solve entanglement.
Mr. Kien also stated that it is necessary to protect the interests of investors and avoid the risk of system breakdown. With the same point of view, Mr. Tran Dinh Thien said that if the real estate trading activity is criminalized, as currently, big investors will lose all opportunities and motivation and even withdraw from the market. Therefore, the criminalization of relationships in the real estate sector must be actually clear.
Information from the seminar also revealed that, at present, the SBV has not officially requested credit institutions not to lend more than 80 percent for real estate investment and trading. Some banks and credit institutions have recently suspended disbursement because they have run out of credit growth limit in the first quarter. Some projects and investors face legal problems and have to stop. Therefore, this situation occurs locally but not in many credit institutions.
According to the Ministry of Construction, in 2021 and early 2022, the supply of real estate in localities across the country is limit ed and tends to decrease significantly. Especially, there is a shortage of social housing and housing for workers and low-income people. At the same time, housing prices have increased strongly compared to people's income. Therefore, removing difficulties in the capital is also a solution to promote and increase supply for the market and reduce real estate prices.
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