Real estate consultants believe SBV amendments to Circular No. 36 should not be applied across the board.
Now is a good time to issue amendments to Circular No. 36 as credit in the real estate market has increased markedly, according to Mr. Stephen Wyatt, Country Head of real estate consultants Jones Lang LaSalle (JLL) Vietnam, but it should be applied on a case-by-case basis rather than across the board.
When implemented, he went on, the amendments from the State Bank of Vietnam will have an affect the country’s real estate market.
“What we always advise investors or developers in real estate or individuals who are looking at buying property is that you need to be aware of your own financial situation and make sure that you are not overextending yourself and taking on more debt than you think you can actually pay and not betting on the market improving all the time.”
“If the developer is highly leveraged they already have a lot of debt and then obviously the level of debt or the level of credit should be lower, but if there are developers with very good track records then there is no reason why banks cannot continue to lend to those developers or people with solid finances,” he said. “I therefore believe it should be applied on a case-by-case basis.”
Vietnam’s real estate market is in a very early stage of recovery and it is a touch early to begin implementing cooling measures, which were applied by Singapore and Hong Kong only when their markets became overheated.
The SBV’s amendments to Circular No 36/2014 aim at reducing the use of short-term funds and promoting medium- and long-term loans.
The main elements of Circular No. 36 are about trying to curb the risk of a property bubble appearing and the possibility of certain companies and individuals overextending themselves.