Real estate credit increases despite slow market recovery

Real estate business credit and the proportion of individual corporate bond issuance have continued to increase sharply in the context of supply and transactions in the property market not showing much improvement.

Real estate business credit and the proportion of individual corporate bond issuance have continued to increase sharply in the context of supply and transactions in the property market not showing much improvement.

Real estate credit in the third quarter reached VNĐ1.3 quadrillion (US$51 billion), an increase of 29.2 per cent over the same period last year. The credits for construction, repair and home buying only accounted for over VNĐ125.8 trillion, the remaining were loans for real estate business activities. 

Meanwhile, in September alone, there were 24 private corporate bond issuances worth VNĐ22.3 trillion and one initial public offering worth VNĐ1.7 trillion. 

Enterprises bought back VNĐ11.7 trillion of bonds before maturity, up 2 per cent compared to the same period in 2023. 

In the third quarter, trading bonds by some real estate enterprises increased sharply again, said deputy director of the Department of Housing and Real Estate Market Management, Hoàng Hải. 

Some banks' financial reports of the third quarter also showed that real estate credit is on the rise. For example, real estate credit at Techcombank reached nearly VNĐ210 trillion, up 18.6 per cent compared to the beginning of the year, accounting for nearly 35 per cent of the total outstanding loans.

VPBank also had a growth rate of 43.5 per cent in real estate credit to VNĐ165 trillion, accounting for nearly 26 per cent of total outstanding loans. 

Notably, some banks posted record high growth in real estate credit, such as VIB (up 275 per cent) and Kien Long Bank (up 172 per cent) compared to the beginning of the year.

The Government's supportive measures have helped the domestic real estate market to improve. However, the market recovery has not been as expected, according to the Ministry of Construction.

The ministry's latest report shows that in the third quarter, 16 commercial housing projects were completed nationwide, up by 78 per cent compared to the second quarter, but only 76 per cent of volume in the same period in 2023. While, only one social housing project was partially completed. 

Notably, the real estate inventory in the third quarter was about 25,937 products, up by 50.6 per cent compared to the second quarter of 2024. 

However, real estate prices in the third quarter still continued to increase, especially in larger cities such as Hà Nội and HCM City, with an average increase of 4-6 per cent per quarter and 22-25 per cent per year. Some areas recorded an increase of up to 35-40 per cent.

Vice chairman of the Việt Nam Real Estate Association, Nguyễn Văn Đính, was quoted by Kinh tế Đô thị (the Urban & Economic Affaris) newspaper who said: “The impressive growth figures of real estate loans from banks have demonstrated the Government's efforts on removing difficulties of enterprises.

"Many new projects have been marketed, helping to increase the supply. However, improving the confidence of investors and home buyers in the market is still slow, especially those who are facing financial pressure from previous loans.”

Vice chairman of the Hà Nội Real Estate Club, Nguyễn Thế Điệp said that the growth of real estate loans from banks shows that they have widened the lending conditions for the businesses, thereby helping businesses to be able to repay bonds due for payment and restart projects.

“However, it needs to be careful with the risks from banks pumping a lot of capital into real estate market. In case of bad business performance leading to bad debt, the bank is forced to auction the mortgaged assets," Điệp said. 

Meanwhile, recovering capital from the enterprise's mortgaged assets is not a simple process, because many projects cannot be sold although the bank has auctioned dozens of times, he said.

President of the National Economics University, Prof. Dr. Phạm Hồng Chương said commercial banks did not need to pump too much credit to high-end real estate projects, they could instead focus on projects that meet the real housing needs of the people. 

At the same time, it is necessary to issue appropriate lending criteria for each type of real estate, along with strengthening the control and supervision of lending conditions and use of loans to limit bad debt.

At present, one of the important issues is that the Government needs to have policies helping the enterprises to take capital sources from bonds. 

It should also promote attracting foreign investment to create other long-term capital channels and real estate investment funds. Those will diversify capital mobilisation channels, besides bank credit capital and the corporate bond market, Chương said. — VNS

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