Surge in loans shifts Vietnam’s housing stock

Loans in the property sector surged this year, increasing by 70 percent in comparison with the lowest level in 2012 to touch 333 trillion VND (14.8 billion USD).

Statistics from the State Bank of Vietnam (SBV) showed that in the first eight months of the year, the total loans in the real estate sector rose by 10 percent from 2014.

This is a relatively high growth rate, as the rate was 4.33 percent during the same period in 2014.

The central bank's Deputy Governor Nguyen Thi Hong said there was no concern regarding loans in the sector as they accounted for a small portion.

In addition, the loans are invested in apartment buildings for which there is real demand by people for their living requirements. The increasing number of loans in the real estate sector has contributed to reducing inventories in the construction, steel and cement sectors.

However, Hong said the SBV would continue to monitor the increase in loans to ensure safety and effectiveness in credit management.

She said the central bank has promulgated Circular 36/2014/TT-NHNN for the tight supervision of credit to prevent "hot" growth in the real estate market.

Banks said the rising number of loans in the first months of the year was because of the warm property market.

Many home buyers took advantage of falling interest rates to access bank loans to buy apartments.

However, Tran Du Lich, a member of the Monetary and Financial Policies Advisory Council, said bad debts of the real estate sector were still the most difficult for the banking system as the assets did not have high flexibility.

Lich said banks should promote risk management when loans poured into the property sector.

The Prime Minister has asked banks to closely follow and control their loans to prevent a market "bubble" and unhealthy development.-VNA