High real estate credit growth raises concern
Real estate loans by the end of September this year were VNĐ3.15 quadrillion, up 9.15 per cent compared to the end of last year. Photo cafef.vn |
HÀ NỘI - There is a concern about risks that can arise as real estate credit has increased sharply in recent years, particularly by the end of September, when the real estate credit growth was higher than the general credit growth of the entire economy.
In a recent meeting of the National Assembly, State Bank of Vietnam (SBV)’s Governor Nguyễn Thị Hồng said real estate loans by the end of September this year were VNĐ3.15 quadrillion, up 9.15 per cent compared to the end of last year. The rise was also 0.15 per cent higher than the general credit growth rate of the entire economy.
Notably, real estate business credit by the end of September 2024 increased by 16 per cent, while consumer real estate credit increased by only 4.6 per cent. This caused the proportion of real estate business credit to surge to 40 per cent, while the proportion of real estate consumer credit to decline to 60 per cent.
Nguyễn Quang Huy, a financial expert from Nguyễn Trãi University, said the SBV has introduced many management policies to control credit flows into real estate, but real estate credit growth remained higher than the general credit growth of the entire economy. Therefore, risk control will face many challenges.
Excessive growth in real estate credit will put pressure on the monetary and financial policies.
According to Huy, most of the products offered in the real estate market are in the high-end segment. Real estate prices have increased significantly since the beginning of this year, largely due to scarce supply and strong support from credit flows. Real estate prices have increased too quickly, which can cause a bubble, especially when real demand cannot keep up the rising price.
When most of the credit is focused on the high-end real estate segment, potential bad debts can easily arise if the economic growth shows signs of slowdown or the real estate market encounters difficulties, Huy said.
According to the financial expert, high-end real estate projects all require large amounts of capital so real estate developers often need high debt ratios.
If demand in the high-end real estate segment declines, the developers may have difficulties in paying off loans that creates great pressure on banks. Real estate is also the main collateral of enterprises and individuals for bank loans. When real estate prices increase too much and do not truly reflect the true value of the property, the value of the collateral may not be enough to compensate if there is a risk of bad debt.
According to experts, a strong focus of capital flows on real estate will reduce investment capital for other production and business sectors that hinders the overall development of the economy.
To control credit risks and ensure the safety of the banking system, experts emphasised the need for strong management measures from the SBV to limit the amount of credit to the high-end real estate segment and encourage credit to mid-range and affordable segments to meet real demand and increase liquidity.
See also
Cheap capital returns to banks
16:20 | 26/12/2024 Economy
Vietnam emerges as strategic player in global economy
16:44 | 25/12/2024 Economy
Vietnam outpaces Bangladesh to become world’s second apparel - textile exporter
16:34 | 25/12/2024 Economy
Vietnam's e-commerce market exceeds 25 billion USD
14:22 | 25/12/2024 Economy
Foreign investment into Thailand up 118% in 11 months
14:13 | 25/12/2024 Economy
Removing Vietnam’s logistics bottlenecks
15:13 | 24/12/2024 Economy
See more news
2024 viewed as a “very miraculous” year for Vietnam: Chinese veteran journalist
14:48 | 24/12/2024 Economy
New FTas boost development of foreign markets for Vietnamese goods
16:42 | 23/12/2024 Economy
2024 economic growth propels Vietnam into its “Rising Era”
16:34 | 23/12/2024 Economy
Organic textiles produced in Vietnam
16:25 | 23/12/2024 Economy
Vietnamese aviation achieves high USOAP-CMA ratings in the region
16:08 | 23/12/2024 Economy
Year-end stimulus expected to boost economic growth
15:37 | 23/12/2024 Economy
Domestic factors to drive Vietnam's GDP growth in 2025: VinaCapital
15:30 | 23/12/2024 Economy
Vietnam – Italy trade cooperation promises bright prospects in 2025: Trade counsellor
15:08 | 23/12/2024 Economy
PM urges concerted efforts for economic growth of at least 8% in 2025
15:00 | 23/12/2024 Economy
UAE a vital market of Vietnam in Middle East: Ambassador
14:56 | 23/12/2024 Economy
Ninh Binh promotes green tourism development
06:22 | 27/12/2024 Tourism
Agricultural, rural tourism provides opportunities for “take-off”
06:15 | 27/12/2024 Tourism
Air tickets from HCMC fully booked for Tet holiday
17:31 | 26/12/2024 Society
Cheap capital returns to banks
16:20 | 26/12/2024 Economy
PV GAS sets many records, exceeds 2024 production, business plan
16:57 | 25/12/2024 Vietnamese Brands
Multimedia
Glorious tradition of the Vietnam People's Army
08:30 | 22/12/2024 Infographic
Total FDI registered in Vietnam hits 31.4 billion USD in January-November
09:02 | 17/12/2024 Infographic
First 11 months of 2024: Import-export turnover increases 15.4%
10:55 | 16/12/2024 Infographic
11-month agro-forestry-fishery exports exceed yearly target
19:55 | 15/12/2024 Infographic
Hanoi achieves or exceeds 23/24 socio-economic targets for 2024
08:57 | 13/12/2024 Infographic
Amended Electricity Law proves MoIT’s institutional improvement success
17:06 | 23/12/2024 Policy
Ministry proposes extending agricultural land tax exemption through 2030
15:06 | 23/12/2024 Policy
Gov't targets to gradually make English second language at schools by 2030
15:45 | 21/12/2024 Policy
Nine newly-adopted laws made public
16:42 | 20/12/2024 Policy
Industry sector asked to urgently restart Ninh Thuan nuclear power project
14:35 | 24/12/2024 Energy
Success story behind 500kV Circuit-3 transmission line project
16:43 | 23/12/2024 Energy
Ministry proposes incentives for renewable energy projects
16:17 | 20/12/2024 Energy
The Era of Advancement for Vietnam Industrial Park
17:15 | 19/12/2024 Industry
Vietnam increasingly attractive to foreign investors
14:17 | 24/12/2024 Investment
Nghe An Southeast Economic Zone aims to attract 1 billion USD in FDI in 2025
12:33 | 21/12/2024 Investment
Boeing aims to expand investment and cooperation in Vietnam’s defense sector
17:00 | 19/12/2024 Investment
Can Tho attracts non-state investment
10:21 | 17/12/2024 Investment
Banking sector: Capital flows with no congestion
15:35 | 25/12/2024 Finance-Banking
Cashless payment requires biometric data updating from January 1, 2025
10:30 | 24/12/2024 Finance-Banking
Year-end surge in property bond issuance amid financial challenges
09:39 | 20/12/2024 Finance-Banking
Vietcombank named most valuable brand in Vietnam
16:43 | 18/12/2024 Finance-Banking
Sowing millions of seeds to green Vietnam’s shared home
15:08 | 24/12/2024 Environment
Dong Thap revives red-crowned crane population
14:29 | 24/12/2024 Environment
Vietnam likely to face continued turbulent weather systems in 2025
14:26 | 19/12/2024 Environment
Nature-based projects help Mekong Delta fight climate change
16:31 | 18/12/2024 Environment
Innovative startup ecosystem witnesses strong development
09:21 | 25/12/2024 Science - Technology
Top 10 science and technology highlights in Vietnam in 2024 announced
15:10 | 24/12/2024 Science - Technology
Contracts worth 286.3 million USD inked at Vietnam Int’l Defence Expo 2024
17:02 | 22/12/2024 Science - Technology
Vietnam can partner with UK in developing nuclear power: Expert
12:43 | 21/12/2024 Science - Technology
Air tickets from HCMC fully booked for Tet holiday
17:31 | 26/12/2024 Society
Bac Ninh Province focuses on year-end market stabilization
16:21 | 25/12/2024 Society
Vietnam aims to reduce greenhouse gas emissions in agriculture production
08:57 | 25/12/2024 Society
Metro Line 1 serves 150,000 passengers on opening day
15:35 | 24/12/2024 Society
PV GAS sets many records, exceeds 2024 production, business plan
16:57 | 25/12/2024 Vietnamese Brands
“PV GAS - Green Energy Journey” marathon: Act for health, act for the environment
06:00 | 25/12/2024 Vietnamese Brands
PV GAS reviews maintenance and repair of gas facilities in 2024
15:27 | 24/12/2024 Vietnamese Brands
Vietnamese products make waves at Malaysia’s halal festival
15:06 | 24/12/2024 Vietnamese Brands
“City Tet Fest - Thu Duc 2025” New Year Festival to be held soon
16:33 | 25/12/2024 Culture
“Xen Dong” ceremony of Thai ethnic people recognised as national intangible cultural heritage
16:24 | 24/12/2024 Culture
Fireworks to light up sky over Hanoi on New Year celebration
15:13 | 23/12/2024 Culture
Vietnam’s high-end fashion targets Chinese market
10:04 | 22/12/2024 Culture
Ninh Binh promotes green tourism development
06:22 | 27/12/2024 Tourism
Agricultural, rural tourism provides opportunities for “take-off”
06:15 | 27/12/2024 Tourism
Son La rural tourism promoted
10:54 | 25/12/2024 Tourism
Vietnam aims to welcome 22-23 million international visitors in 2025
14:56 | 24/12/2024 Tourism