Capital For Luxury Real Estate Is Strangled

Please along with Vietnam real estate to learn about this policy and its impact on the real estate market in the near future.

Capital luxury real estate is strangled

According to information on VnExpress, the State Bank has written to require commercial banks to strictly control the investment capital for real estate business. As a result, the authority requires banks to review issuing credit for large investors and avoid credit concentration to minimize risk.

The State Bank of Vietnam’s letter states: “Banks are recommended to be restrained and careful when considering and evaluating loans for new projects, especially luxury commercial housing projects, resorts, low liquidity project “.

As for the projects that are funding, the operator also requires commercial banks to update

Particularly for projects that are funding capital, the authority also requires commercial banks to review, re-evaluate the lending situation, monitor closely the use of loans, progress, financial situation, income and other sources of repayment of customers to take measures to strengthen the risk management, ensuring full and timely repayment of debt.

Thus, the regulation of “capital strangle” of the State Bank focused mainly on luxury housing projects to limit the situation of excess supply is hurting the market, the direction for businesses redirect investment to affordable apartment projects.
Impact of strangling policy of capital on real estate market

The problem of oversupply of luxury apartments has been repeated in the recent information on the real estate market. And in the current context, the strangling policy of capital of the State Bank can have a positive impact on the balance of the housing market, regulating the development of real estate projects to balance supply with the actual demand, reduce the risk of recurring real estate bubble.

Luxury apartments are exceeding the demand

On the business side, this policy also challenges the financial capacity of investors. Large investors will usually be less affected, but retail investors will face many difficulties. But through this, customers are also easier to evaluate and choose the reputable investor.

Does the strangling policy of capital affect homebuyers?

Strangling policy of capital apply only to investors, real estate business with new projects, mainly targeting the luxury market segment so it will not affect customers. Moreover, in accordance with the regulations on real estate business Law and Housing Law, real estate projects, once they are financed by banks, commit themselves to provide sufficient capital for the project to be completed and house delivery to the buyer. If not, the bank will be obliged to guarantee the house buyer. Therefore, house buyers can completely be assured.

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