Outstanding real estate loans total VND420 trillion at the moment, up by VND100 trillion from last year, said Nguyen Tran Nam, chairman of the Vietnam Real Estate Association, at a property seminar called “Building the Future” held in HCMC recently by Forbes Vietnam.
In the coming time, real estate credit is forecast to decline.
“In 2013-2015, when the (financial) crisis ended, property loan growth was 50% higher than the average credit growth rate. But in 2016, while average credit growth is 18%, real estate loans have grown only 12%. In 2017, the slowdown would be clearer,” Nam said.
Outstanding real estate loans focus on just a number of major investors, meaning debt owed by each of them is big, Nam said worryingly.
Tu Tien Phat, deputy general director for sales at ACB, said there is little room for banks to inject more cash into the real estate sector as property credit has almost hit 40% of total outstanding loans at many banks.
Banks would be more careful when they consider lending to property projects, said Phat. Interest rates for real estate loans, therefore, would soar next year.
Property investors are heavily dependent on bank loans, triggering concerns that interest rates could be hiked.
Phat said Vietnamese people “have the best tolerance for interest rates in the world” as domestic rates had three times surpassed the 20% mark. Even so, he suggested bringing down rates to less than 10%, since the threshold of “tolerance” is 12-15%.
Experts ascribed strong property credit growth to the imbalance of supply and demand and the overheated high-end housing market segment.
Phat of ACB noted that many up-market housing projects are seeing strong sales as they meet the demand of many people who buy homes as an investment vehicle.
Le Anh Tuan, director and head of research at Dragon Capital, forecast high-end housing supply would remain plentiful in the next few years.
In particular, the demand for land lots and villas could surge, leading prices to swell as well, he said.
Neil MacGregor, managing director of Savills Vietnam, said there would be no real estate bubble in the future since demand was quite strong. Supply in the medium-end segment would edge up next year, he said, adding more capital would be channeled into it, thus balancing the market.