Property market early rebound unlikely: economist
Director of the Business Development Institute Le Xuan Nghia discussed
with the Vietnam Investment Review why he is wary of the effect the
property-oriented preferential credit packages will have on the market.
Director of the Business Development Institute Le Xuan Nghia discussed
with the Vietnam Investment Review why he is wary of the effect the
property-oriented preferential credit packages will have on the market.
Q: We already have specific credit programmes to fuel demand in the property market, such as the government’s 30 trillion VND (1.4 billion USD) bailout package, but the results have remained modest. Why?
A: You should note that the bailout targeted low-income people to help them more easily become home owners. This was only a very specific market segment, so its knock-on effect on the whole market is minor.
As of now, obstacles to using the package are being tackled. This includes allowing more properties and other entities access to the funds, simplifying procedures and extending loan durations.
Q: What are your thoughts on the potential impact of the new preferential credit package worth 50 trillion VND (2.3 billion USD) to support property market development?
A: This package, developed from four sides - investors, contractors, building material suppliers and banks – will have a positive impact if it is effectively implemented but on the construction sector, helping to reduce building material surpluses and pushing up development in the coming period.
But to truly succeed with this package, we first need to streamline the building material market and work toward forming building material transaction centres.
Q: How long do you think it would take to realise these goals?
A: It won’t be quick, but it would be faster if there were online building material transaction centres to save on expenses and avoid minor transactions.
Effective cooperation between stakeholders (the four aforementioned) would not only help resurrect the building material market, but also the property market.
Q: When should people expect growth to rise after these credit packages are implemented?
A: The packages centre on infrastructure and housing development for low-income people, so they are unlikely to push the entire market up.
But they could have a positive effect on the development of the property market.
In my view, the property market will likely rebound from the third quarter as the economy is expected to see much more robust growth by that time.
Q: We already have specific credit programmes to fuel demand in the property market, such as the government’s 30 trillion VND (1.4 billion USD) bailout package, but the results have remained modest. Why?
A: You should note that the bailout targeted low-income people to help them more easily become home owners. This was only a very specific market segment, so its knock-on effect on the whole market is minor.
As of now, obstacles to using the package are being tackled. This includes allowing more properties and other entities access to the funds, simplifying procedures and extending loan durations.
Q: What are your thoughts on the potential impact of the new preferential credit package worth 50 trillion VND (2.3 billion USD) to support property market development?
A: This package, developed from four sides - investors, contractors, building material suppliers and banks – will have a positive impact if it is effectively implemented but on the construction sector, helping to reduce building material surpluses and pushing up development in the coming period.
But to truly succeed with this package, we first need to streamline the building material market and work toward forming building material transaction centres.
Q: How long do you think it would take to realise these goals?
A: It won’t be quick, but it would be faster if there were online building material transaction centres to save on expenses and avoid minor transactions.
Effective cooperation between stakeholders (the four aforementioned) would not only help resurrect the building material market, but also the property market.
Q: When should people expect growth to rise after these credit packages are implemented?
A: The packages centre on infrastructure and housing development for low-income people, so they are unlikely to push the entire market up.
But they could have a positive effect on the development of the property market.
In my view, the property market will likely rebound from the third quarter as the economy is expected to see much more robust growth by that time.
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