Total outstanding loans for the Vietnamese realty industry increased 14.59% in the first nine months of this year, 2.5 percentage points higher than the overall credit growth in the country, data of the Credit Department under the State Bank of Vietnam showed.
Lending for the sector was estimated at 358.4 trillion dong (roughly $16 billion) at the end of September, accounting for 8.05% of the total of the whole system.
Lending for the real estate sector, the backbone of the economy, has been on the rise over the past few years, growing 14% year-on-year in 2012, 14.7% in 2013 and 15.2% in 2014.
The real estate market in Vietnam has shown signs of warming up after years of doldrums due to the oversupply of unaffordable housing.
According to the Ministry of Construction, the value of unsold real estate in Vietnam was estimated at 56.29 trillion dong ($2.5 billion) as of October 20, down 5.23% from a month earlier and 56.21% from early 2013. This value excludes ongoing projects.
The inventory ratio of the residential realty market in Hanoi fell 11 percentage points quarter-on-quarters and seven percentage points year-on-year thanks to continued strong performance, Savills Vietnam said in its latest report.
In Ho Chi Minh City, there was a strong increase in transaction volume with approximately 5,220 sales, up 4% quarter-on-quarter and 59% year-on-year, the highest in the last five years, the real estate brokerage firm said.
A central bank circular dated in November 2014 eased the risk adverse coefficient of loans for real estate from 250% previously to 150%, the lowest level ever allowed, channeling cash flows into the real estate market.
Foreign investors have put large funding in Vietnam’s real estate market on hopes for a new growth cycle of the sector as the country is poised to sign a landmark Pacific Rim trade agreement soon.
The Vietnam Institute for Economic and Policy Research (VEPR) said in a recently-released report that the recovery of the real estate market is a positive signal for the whole economy, but caution is advised with the possibility of asset bubbles forming due to an excessively loose monetary policy.
Construction Minister Trinh Dinh Dung said during a National Assembly session last week that a bubble in the local property market is unlikely presently. However, eyes should be put on this market to ensure its sustainable development.