Money flows into real estate market as prices rise
Experts have urged state management agencies to take necessary measures to drive the current strong cash flow into real estate out of the market as prices are increasing, depriving low-income earners of the opportunity of owning houses.
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Dinh Tuan Minh, a financial expert, commented that in Vietnam, like other developing countries which are in transitional period, the real estate price has been on the rise.
People are not only buying houses in Vietnam, but also pouring money into properties overseas, including the US. An NAR report showed that in 2016 Vietnamese spent more than US$3 billion to buy houses in the country.
Tran Hung from VFM, a fund management company, also commented that real estate has always been the favorite investment channel for Vietnamese for many years. The real estate market heats up every time the economy recovers.
However, he pointed out that this is not good for the national economy as resources are concentrated in real estate, pushing prices high up.
Bui Trinh, a respected economist, also warned that the cash flow to the real estate sector may lead to high bad debts and other risks.
“The surplus in the construction industry is high with the big gap between the cost price and selling price. Real estate in Vietnam is mainly formed on relationships and groups of interests, with a lack of transparency. The money flow here does not help the economy develop sustainably,” he said.
In fact, there are many investment channels in Vietnam. There are 30 securities investment funds, including 18 open-end ones.
The total assets of domestic open funds by May 31, 2017 had reached VND5 trillion and most of them saw stable net asset value growth with growth rates higher than bank deposit interest rates.
“The government has been focusing on increasing the size of the finance market. If the market is large enough and there are good commodities in it, it will automatically attract cash flow,” Hung said.
A report from the State Bank of Vietnam shows that in the first six months of the year, lending grew by 9%, while mobilized capital grew by 5.9% only, which meant a higher growth rate of outstanding loans over mobilized capital.
Where has the money gone? According to Hieu, the money has been poured into stocks and real estate. He warned that if this continues to happen, banks may meet problems in liquidity.
Some international financial institutions, including the World Bank and IMF, have issued warnings about the high credit growth rate.
