Lower Credit Growth Will Be Better for the Real Estate Market, Economists Say

Diep Nguyen

16:26 04/12/2018

BizLIVE -

Recently, full of real estate specialists like Tran Dinh Thien warn that the credit growth is already too high, about 20 percent, which reminds people of 2008 credit bubble.

Lower Credit Growth Will Be Better for the Real Estate Market, Economists Say

Photo: Zing

In a recent report, Bao Viet Securities (BVSC) projected that the credit growth in the next three to five years will be around 14 percent per year, lower than the average 18.1 percent in the 2015-2017 period.
According to the report, this reduction will be due to the decline in capital supply and demand. From the capital demand, Vietnam’s economic growth will slow to 6.4 to 6.5 percent, thus this will have the effects on capital demand. The local companies will need less capital for expanding production and business.
What is more, from BVSC predictions, when the dong interest rates get higher next year, about 0.25-0.5 percentage points in 2019, the loan demands from borrowers will decline.
However, this change is good for some rural people who is in strong desire for owning house in big cities like Hanoi and Ho Chi Minh City. Recently, full of real estate specialists like Tran Dinh Thien warn that the credit growth is already too high, about 20 percent, which reminds people of 2008 credit bubble.
Many economists warn of too hot real estate credit growth will lead to sky-high real estate prices then make the dream of owning house become distant to middle income and low income people.
Under the circumstances of lower credit growth, the money flow into the real estate will become less then the prices become more normal. More people will have chances to own houses.
Last but not least, already Vietnam’s real estate market has the very high rates of empty house and apartment blocks. When the prices become more in the reach of people, those vacant houses and apartments will be much less than before. 

DIEP NGUYEN

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