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The issue of cash flow for real estate project development is a major concern not only for businesses but also for investors and people with real needs. Facing the situation of banks strictly controlling loans for the real estate sector, many people wonder: what will housing prices be like in the near future?…
THE MARKET WILL BE MORE DIFFICULT
According to Mr. Nguyen Quoc Hung, General Secretary of the Vietnam Banking Association, the State Bank’s strict control of real estate credit is a solution to limit speculative activities, help the market become transparent, and avoid a real estate bubble occurs. This is necessary to healthy the market and minimize risks to the economy, especially in the context of the “hot” real estate market recently, when most investors use leverage. financial leverage.
Through controlling this capital flow, the real estate credit structure has shifted in a positive direction. Specifically, nearly 70% is for consumption and self-use purposes, the rest is for real estate business loans. Although outstanding debt from real estate business activities only accounts for about 7% of total outstanding credit debt, assets secured by real estate account for a large proportion (about 80%) of total collateral assets. mortgages that banks are currently managing.
Many experts also believe that strict control of real estate credit means banks must consider which projects are effective and meet consumer needs to ensure system safety and can Recover principal and interest before lending. Therefore, projects that want to borrow bank credit need to have complete legal documents (land handover, construction permit, sales license) and especially investors with strong financial capacity to deploy. Banks will be willing to lend to the project. Therefore, straightening real estate credit aims to control inflation, contributing to controlling the money supply in the market more cautiously than before. This move also partly cools the housing price bubble, which has been too high recently. In particular, it will impact the behavior of borrowing capital to buy land for speculation, contributing to promoting a healthier and more transparent market development.
However, according to Dr. Su Ngoc Khuong, Senior Director of Savills Vietnam Investment Department, in the context that banks are reviewing their ability to lend to real estate, if macro policies such as fiscal and monetary policies change. Once the project’s legal problems are resolved, the market will have more positive signals. Other businesses in construction and services will also benefit from real estate businesses.
“To develop a real estate project, investors need equity capital, loans from banks, capital from partners and capital received in advance from customers. These are the main capital groups to deploy residential real estate projects. Of which, the majority of capital comes from bank loans. The trend of gradually tightening credit flows by many banks will make the market more difficult. But project developers will have to manage to solve this problem through many different forms,” Mr. Khuong stated.
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ARE REAL ESTATE PRICES INCREASING OR DECREASING?
The tightening of credit for real estate lending will affect both buyers and investors. It is difficult for buyers to access loan capital, which will cause liquidity to decrease. However, according to many experts, this also affects investors and the supply of goods will be limited. Therefore, the projects that can be sold to the market are limited, so the investor will not reduce the selling price.
Savills Vietnam representative also commented: “New supply on the market is quite limited, investors increase selling prices, primary buyers expect increased value due to inflation, rising prices of construction materials.” . These are developments in the market recently and in the past year, especially residential real estate. From now until the end of the year, the market will not change much compared to the past 7 months when supply is limited, banks still strongly tighten credit, prices will increase by 20-30% compared to previous years. From another perspective, liquidity is slow because people who want to buy real estate are unlikely to be able to pay. This is an issue we need to look at in the market from the perspective of supply and demand, liquidity and price.” Therefore, Mr. Khuong proposed that the Government need to come up with solutions to help real estate businesses have the opportunity to create value and add new supply to serve the housing needs of people.
Regarding the long-term housing picture, Savills experts believe that residential real estate in large cities such as Hanoi, Da Nang and Nha Trang receives the attention of people to live and work. Therefore, the housing problem will require a very large supply and should be given top priority. However, with the State’s policies such as fiscal, monetary, and legal policies in the next 3-5 years, assuming current difficulties, the supply will not be much. Large cities will gradually lose their attractiveness and competitiveness compared to neighboring areas.
