Customers are examining a real estate projects. (Source: VNA)

A real estate bubble of the kind seen in 2007 is not likely to occur this year or 2016, according to Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA).

He said there were several reasons for his view, one of which was the fact that the domestic economy is only in the early stage of recovery with credit growth in 2014 at just 12.62 percent and the figure for 2015 is estimated at around 16 percent, far lower than the 37.8 percent rate recorded in 2007 – the peak year of the real estate bubble.

In addition, Chau said, the government has succeeded in maintaining macro-economic stability and has been flexible but strict in executing monetary policies and restructuring the banking system.

Bad debt has been controlled and brought to a reasonable level, and real estate transactions are within normal ranges without any signs of speculation, he said.

According to the HoREA, all segments of the real estate market in the city in the first seven months have been on a recovery trend.

While the low-end housing segment of the market has been developing across all districts, high-end products have shifted toward the eastern area of the city in districts 2 and 9.

The growth of housing sales has been positive, contributing to a significant drop in inventory. At the end of 2012, there were 14,490 unsold apartments but the figure has fallen to 3,402 units currently.

In the first six months of this year, real estate transactions increased in HCM City with more than 7,000 successful sales, up 2.8 times over the same period.

According to Chau, a number of factors are propelling the recovery of the market, including the great efforts of real estate companies to restructure their business activities and the introduction of the new housing law, which allows Vietnamese overseas and foreigners to have ownership rights of apartments.

Increased confidence of consumers, investors, enterprises and banks also supported the market, which has made itself appealing to foreign investors as well, said Chau.

He added that however, China’s devaluation of its yuan last week will have mid and long-term impacts on the market as a result of its negative effects on business and production activity, the job market, incomes and purchasing power.-VNA