There should be a reasonable roadmap in controlling capital into real estate

A view of the dialogue.

In the period of economic recovery after the Covid-19 pandemic, implementing Resolution No. 11/NQ-CP dated January 30, 2022 of the Government, the State Bank requested that commercial banks must direct credit to production, business, and priority areas according to the policy of the Government. At the same time, continue to strictly control credit in risk areas, including real estate investment and business.

Other capital mobilization channels for real estate such as corporate bond channels have revealed many gaps and inadequacies that need to be adjusted and improved.

At the seminar "Controlling capital into Real Estate - Policy and Impact" held by the Ministry of Construction on May 11, many opinions said that controlling capital into real estate is necessary.

However, if capital into real estate is not properly controlled, the real estate market will be strongly affected, thereby affecting dozens of other related industries such as construction materials, interior - exterior, green landscape, and electrical and electronic equipment.

Speaking at the seminar, Assoc. Prof. Dr. Tran Dinh Thien, former Director of the Vietnam Economic Institute, said that at present, capital flows into other industries compared to real estate are biased, so when it comes to real estate we're always talking about tightening.

According to Assoc. Prof. Dr. Tran Dinh Thien, after two years of being affected by the Covid-19 pandemic, the real estate market was blocked, now with the economic recovery, the opportunity for a booming market is approaching.

However, expert Tran Dinh Thien said that the control of capital flows into real estate has not been shaped, which could lead to missing out on this opportunity, which is because the current policy is not "bold" enough to approach the opportunity in the real estate market.

Mr Le Hoang Chau, Chairman of Ho Chi Minh City Real Estate Association, said that in fact, in recent times, commercial banks have stopped lending real estate credit, leading to difficulties for businesses and consumers, because this is the "midwife" for real estate businesses in the stage of implementing real estate projects to the stage of attracting capital from customers.

Mr. Le Hoang Chau said he highly approves of the State Bank's roadmap to tighten bank credit, according to which commercial banks can only use 30% of real estate credit loans by 2023, many countries have done the same.

However, if most countries already have real estate investment funds to socialize capital for real estate with real estate investment funds, in Vietnam there is only one real estate investment fund of Techcombank with capital few sources. Therefore, the tightening of credit financing for real estate will certainly have a strong influence on real estate business.

"The state should not tighten capital into the real estate market but should control lending to businesses and borrowers and use loans for the right purposes," Mr. Le Hoang Chau suggested.

At the seminar, many said that if banks continue to tighten lending to real estate, real estate businesses and a series of businesses will continue to face difficulties if they cannot access capital.

Housing prices may escalate and people's access opportunities to housing will decrease.

Mr Le Hoang Hoan, Chairman of the Board of Directors, General Director of Dat Viet Group, said that perfecting the credit policy for the real estate market is an important point to open capital flows and ensure the development of the market towards transparency and stability.

Accordingly, the representative of Dat Viet Group said that the control of the bank's capital should have a roadmap. Banks will selectively tighten real estate credit, not completely lock the real estate credit valve, if credit is locked suddenly, many unfinished projects will face difficulties, businesses cannot repay loans, and banks face the risk of bad debt.

At the same time, it is not recommended to implement the policy of tightening capital into real estate in a leveling manner, which is common to all projects, but it is necessary to classify projects to have appropriate management directions without adversely affecting the market.

“The supply shortage of the real estate market has been detected continuously since 2020. A series of projects could not budge because mechanisms and policies couldn’t be approved. If the business has credit cut off, the projects that are approved will not be able to deploy. The shortage of supply will be more serious,” Mr. Hoan said.

Along with that, there is a consensus on the need for banks to have preferential lending mechanisms and encourage businesses to develop affordable commercial housing projects (VND1 billion to VND2 billion) for real housing needs; increase consumer credit for individual customers buying a home for the first time, buying a home to live, not for speculation.