Housing developers are struggling to cope with banks' tightened lending policies.
The new regulations in tandem with construction materials' risingprices is making it difficult for developers to survive as the realestate market continues to chill for the second straight quarter.
A leader of the Vietnam Construction and Export-Import Corporation(Vinaconex) said an increase in construction materials' prices, alongwith banks' restricted lending policies, had made construction companiesbroke, forcing them to liquidate.
Construction materials'prices increased by 30 to 40 percent during the past few months while anew chill in the property market caused bidders to abandon theirprojects after their proposals concerning the adjustment of constructionmaterials' prices were refused by house owners.
Theprocedures for State funded construction projects, concerning priceadjustments, takes a long time, making the supply of housing projectslag behind schedule which in turn adversely impacts the real estatemarket.
The prices of construction materials including steel, cement and housing equipment continue to soar.
Construction materials account for 40 to 70 percent of the totalestimated capital for building projects, according to the Instituteof Construction Economics .
Property markets primarilydepend on monetary and credit policies, according to a Ministry ofConstruction report that was submitted to the Government Office.
Banks began increasing lending interest rates and applying greaterrestrictions on mortgage loans starting in July, following a warningfrom the State Bank of Vietnam (SBV) that urged financial institutionsto be prudent with issuing loans for real estate projects.
The warning was issued in response to findings that real estate loansaccounted for more than 5 percent of the bad debts that had incurred atseveral commercial banks in the country.
The SBV reducedthe short-term deposit proportion reserved for long-term loans from 40percent to 30 percent and specified real estate loans as high risk.
Vinaconex deputy director Nguyen Dinh Thiet said commercial banks onlylent loans for up to 10 years, and total outstanding real estate loanswere restrained to 10 percent.
Commercial loans providethe primary impetus for the property market, reports the CollierInternational Company. Buyers are hesitating to borrow money from banksto purchase homes, while banks increased their interest rates that rangefrom 17.5 to 18 percent per year.
Investors have begun tosecure capital from other sources including mobilising cash fromsecondary investors and issuing bonds. Secondary investors are not sointerested in investing in housing projects, as the chill in the realestate market continues./.
The new regulations in tandem with construction materials' risingprices is making it difficult for developers to survive as the realestate market continues to chill for the second straight quarter.
A leader of the Vietnam Construction and Export-Import Corporation(Vinaconex) said an increase in construction materials' prices, alongwith banks' restricted lending policies, had made construction companiesbroke, forcing them to liquidate.
Construction materials'prices increased by 30 to 40 percent during the past few months while anew chill in the property market caused bidders to abandon theirprojects after their proposals concerning the adjustment of constructionmaterials' prices were refused by house owners.
Theprocedures for State funded construction projects, concerning priceadjustments, takes a long time, making the supply of housing projectslag behind schedule which in turn adversely impacts the real estatemarket.
The prices of construction materials including steel, cement and housing equipment continue to soar.
Construction materials account for 40 to 70 percent of the totalestimated capital for building projects, according to the Instituteof Construction Economics .
Property markets primarilydepend on monetary and credit policies, according to a Ministry ofConstruction report that was submitted to the Government Office.
Banks began increasing lending interest rates and applying greaterrestrictions on mortgage loans starting in July, following a warningfrom the State Bank of Vietnam (SBV) that urged financial institutionsto be prudent with issuing loans for real estate projects.
The warning was issued in response to findings that real estate loansaccounted for more than 5 percent of the bad debts that had incurred atseveral commercial banks in the country.
The SBV reducedthe short-term deposit proportion reserved for long-term loans from 40percent to 30 percent and specified real estate loans as high risk.
Vinaconex deputy director Nguyen Dinh Thiet said commercial banks onlylent loans for up to 10 years, and total outstanding real estate loanswere restrained to 10 percent.
Commercial loans providethe primary impetus for the property market, reports the CollierInternational Company. Buyers are hesitating to borrow money from banksto purchase homes, while banks increased their interest rates that rangefrom 17.5 to 18 percent per year.
Investors have begun tosecure capital from other sources including mobilising cash fromsecondary investors and issuing bonds. Secondary investors are not sointerested in investing in housing projects, as the chill in the realestate market continues./.
