Gloom has set in in many localities including Bảo Lộc (the Central Highlands province of Lâm Đồng), Đắc Nông, Bình Phước, Bà Rịa-Vũng Tàu, and Bình Thuận, whose real estate markets used to be hot a few months ago. — Photo datxanhgiatrithuc.com
Compiled by Thiên Lý
Trần Trung Thành, a real estate broker in Bình Thuận and Bà Rịa-Vũng Tàu provinces, said since the beginning of April demand for agricultural lands has seen a sharp slump.
The number of people who want to sell land is higher than those who want to buy, he said.
Gloom has set in in many localities including Bảo Lộc (the Central Highlands province of Lâm Đồng), Đắc Nông, Bình Phước, Bà Rịa-Vũng Tàu, and Bình Thuận, whose real estate markets used to be hot a few months ago.
Even the housing segment has shown signs of slowing down in many localities due to falling demand on both the primary and secondary markets.
HCM City is a typical example. The country’s economic hub always has high demand for housing and faces a serious shortage of apartments because there have been few housing projects for the last several years.
Yet the market has not seen much liquidity in recent times.
Trần trọng Nhân, CEO of a housing development company in the city, said the market was vibrant in the first three months of the year but started slowing down significantly after banks tightened lending to the sector.
The representatives of many trading floors concurred with him, saying it has never been as difficult as now to find customers for apartments and street houses and carry out successful transactions.
Consultancy DKRA Vietnam said the city land market had also slowed down, with no transactions carried out in April.
In the first three months the apartment market saw sales plummet by 68 per cent from the previous quarter to 1,385 units, and things could get worse.
Dương Minh Tiến, CEO of Asia New Time Corporation, said liquidity is down dramatically in the real estate market except in the case of some products that are not plagued by legal issues and offer attractive payment policies.
Leading property portal Batdongsan.com reported a year-on-year decrease of 8-9 per cent in April in the number of searches for land and houses on its platform.
Analysts said the real estate market is gloomy also because of rising interest rates and high prices despite developers’ efforts to stimulate the market with promotions and discounts.
They called for closely monitoring the market, saying these signs portend the start of a prolonged bear market.
In January the State Bank of Vietnam issued Directive No 01/CT-NHNN on improving credit quality and tightly controlling loans to potentially risky industries.
It required banks to take measures for controlling credit size and growth, focusing on production and other priority fields in line with the Government's policy to support economic recovery and development, while strictly controlling lending to potentially risky areas such as real estate, the stock market and build-operate-transfer (BOT) and build-transfer (BT) transportation projects.
This followed a rapid increase in money flowing into the real estate market across the country at the start of this year, triggering concerns about speculation pushing up property prices.
In response to the central bank’s directive, banks have begun to stopping lending to risky sectors, especially property.
Sacombank has, for instance, instructed its branches to focus on lending to priority sectors such as agriculture, rural development, exports, supporting industries, small and medium-sized enterprises, high tech industries, services and logistics.
It has also directed them not to lend to the real estate sector until the end of June with the exception of staff and their relatives for buying, building or repairing houses for self-occupation.
Techcombank stopped providing real estate loans on March 25 and is said to be considering resumption only next quarter.
Besides, the credit quota of banks for the real estate sector has also been considered carefully in their lending programmes.
Nguyễn Thị Thanh Hương, general director of the Đại Phúc Land Real Estate Business Investment Company, said the real estate market is likely to collapse due to the credit tightening.
She agreed with the central bank about the necessity to regulate the market to limit speculation, ensure transparency and prevent a bubble from forming.
But the change needs to follow a roadmap and the credit tightening should be applied only to specific cases but not to all real estate businesses, she said.
Real estate has a knock-on effect on various other industries, she pointed out.
Lê Hoàng Châu, chairman of the HCM City Real Estate Association, urged banks to continue providing loans to real estate companies with prestige and credible projects.
He too said that credit tightening needs to be done with a proper roadmap and regulations governing corporate bond issuance should not be as tight as they are now and should allow capable developers to mobilise money.
Analysts said the real estate market always needs a large amount of medium- and long-term capital, and especially now amid the post-pandemic recovery.
Turning off the funding pipeline would have a huge impact on the real estate market, and when it has a problem the economy would be affected, they warned.
They said credit should be tightened only to specific segments while priority should be given to segments where there is a shortage of supply, such as low-cost housing, so that demand could be met.
Diversifying capital sources for the real estate market is necessary to help reduce its reliance on bank loans, they added.
Ministry wants fresh look at major foreign-invested projects
The Ministry of Planning and Investment has called on localities to report on the progress made by foreign-invested projects with a large investment and requiring large parcels of land.
It plans to consider all FDI projects with a registered investment of US$100 million and using at least 50ha of land.
HCM City, Hà Nội, Đà Nẵng, Hải Phòng, Khánh Hòa,and Bà Rịa-Vũng Tàu are required to report on the progress of projects in the real estate sector with land of at least two hectares.
The ministry has also instructed agencies in charge of approving investments to report on capital contribution and disbursement by large foreign-invested firms, fulfilment of commitments made at the time of their licensing and their progress.
They also have to report on the use of land and compliance with legal provisions on land, construction, labour, and environment and fulfillment of financial obligations.
Local governments have to inform the ministry about difficulties foreign projects face and propose solutions or amendments to laws and policies for resolving them and speeding up their progress. —VNS