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Real estate credit may rise 15% this year

Released at: 14:53, 15/10/2015

Real estate credit may rise 15% this year

Highest increase in five years spurring recovery in real estate and no cause for concern according to SBV.

by Tue Lam

Estimates by the Ministry of Construction reveal that real estate credit may increase by 15 per cent this year, to an estimated VND340 trillion ($15.3 billion).

Mr. Nguyen Tien Dong, Director of the Economic Credit Department under the State Bank of Vietnam (SBV), told local media that the recovery in the real estate market is good news for both the economy and banks.

“Credit is essential to restoring the real estate market and removing difficulties in many economic sectors, and recovery in the market will also enable commercial banks to settle their bad debts,” Mr. Dong was quoted as saying.

“However, the department is carefully studying the supply of real estate credit to avoid the reappearance of a real estate bubble,” he said.

Although real estate credit is at its strongest for the last five years there is concern over a bubble as real estate loans bear the greatest risk. Enterprises should therefore not overly depend on bank credit, while banks need to anticipate the risk the real estate sector poses and enhance their control.

Deputy Governor of the SBV Nguyen Thi Hong said that although real estate credit growth is higher than the average it only accounts for 8 per cent of the total and there is no cause for alarm.

The SBV is directing reviews and research on real estate credit and is likely to provide a credit growth target in the future that will rely on the capacity of each bank and economic growth objectives.

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