Vietnam real estate market together with solutions to solve the difficulties. The Ministry of Construction has rescued the market from the shock of hope to recover and develop real estate again.
What does the Ministry of Construction do to address the difficulties in the market? Follow the article below!
Two key points will have a strong impact on the real estate market in Vietnam
On March 15th, the Ministry of Construction has sent official documents to the State Bank, commenting on the draft amendment of Circular 36/2014 / TT-NHNN. The revision of the Draft Circular has caused a lot of controversies recently because of its impact on the Vietnamese real estate market
According to the draft amendment, there are two key changes that will impact the real estate market. Of which, Clause 14 of Article 1 of the draft amendment to Clause 5, Article 17 of Circular 36 stipulates. Credit institutions and foreign bank branches are allowed to use short-term funds for medium and long-term loans. At the maximum rate of 40% (down from 60% to 40%).
In addition, Clause 19 of Article 1 of the amended draft annex 2 of Circular 36. Including the regulation to raise the ceiling of receivables in real estate business in the group of assets with risk coefficient 250% (up from 150% to 250%).
Some precious considerations for the State Bank following the revision of the Circular
According to the Ministry of Construction, the purpose of the amendment of this Circular is to help the market develop more stable and sustainable. However, the State Bank should also consider some factors that affect the market.
The first is Circular 36/2014 / TT-NHNN and other solutions issued by the Government. After more than 2 years of implementation, there have been positive impacts. As a result, real estate prices have been stable, close to real value, liquidity has continuously increased, real estate structure has been adjusted to meet real needs of people. Inventory continued to decrease (up to 62.72% in the first quarter of 2016 compared to the first quarter of 2013). A series of real estate businesses, construction and building materials recovered to contribute to economic growth.
It is important to note that capital needs for real estate are still very large and mainly rely on loans from banks. Nationwide, there are nearly 4,000 ongoing projects with capital requirements of over 4.4 trillion dong. In which the capital needed bank loans accounted for 50% to 60%. Equivalent to VND 2,200,000 – 2,640,000 billion. At the same time, real estate loan outstanding remains at a reasonable level below 10% of total outstanding loans of the banking system.
Considering the real estate changes that affect the Vietnamese economy?
In fact, from 2009 until now, changes in lending policies for real estate have a great impact on the market such as Circular No. 15/2009 / TT-NHNN, Circular No. 36/2014 / TT-NHNN, Circular No. 13/2010 / TT-NHNN.
Circular 36 loosened credit by reducing the proportion of short-term capital to medium and long-term loans from 80% to 60%. The risk weight for real estate business fell from 250% to 150%. Along with other drastic measures of the Government, the real estate market in Vietnam has overcome the period of freezing and recovery.
You can read more information at Vietnam Real Estate News
International experience also shows that real estate business needs to use huge bank loans. The change of real estate will have a huge impact on the economy. The short-term capital utilization rate for medium- and long-term loans should not exceed 60% and the risk-weight ratio is usually between 150% and 200%.
The Ministry of Construction said that management should still be considered to reduce the negative impact on the market
according to some experts, real estate loans from banks are still at a safe level, about 9%. If the ratio of short-term loans to medium and long-term loans is reduced from 60% to d40%. At the same time raising the risk weight from 150% to 250% would be too big, which could cause “shock” to the market.
According to the above analysis, the Ministry of Construction said that the real estate market in Vietnam is still recovering and under control. There is no clear sign of fever and abnormalities. But the use of management tools, regulators still need to be carefully considered. Need to have an appropriate roadmap, avoid negative impact on the market.
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