HCMC real estate firms urge lift in credit growth cap

The Ho Chi Minh City Real Estate Association has proposed that the central bank raise its credit growth cap for the year to 15-16% from the current 14%.

The association (HoREA) specifically suggested the State Bank of Vietnam lift the credit ceiling for the “Big 4” banks, namely BIDV, Agribank, VietinBank, and Vietcombank, as well other commercial banks meeting Basel II standards.

In the first six months of the year, credit for the real estate sector reached VND2,330 trillion ($99.5 billion), a year-on-year growth of 12.31%, higher than the country's average credit growth of 9.35%, according to SBV data.

However, the HoREA argued that in its calculation, credit for the real estate sector was only VND786 trillion ($33.62 billion), or a growth of 8.4%. "This shows that businesses, investors and home buyers found it harder to access credit," it said.

The association also suggested that the central bank allows commercial banks to provide loans to customers to "make capital contributions or cooperate in investments" if borrowers had collateral or could prove their financial capabilities.

The association cited Prime Minister Pham Minh Chinh’s direction at a recent forum where he had said that no "irrational" credit restrictions should be imposed.

"The State Bank of Vietnam must guide domestic banks in lending to the real estate sector in line with laws and regulations, giving priority to commercial housing, housing for low-income earners, housing for workers, and projects to expand market supply," the PM had said.

The SBV had earlier confirmed that it only controls credit to some high risk areas like resort projects and speculative investments, while encouraging lending to housing for low-income earners and workers, as also upgrading old apartment buildings.

SBV Governor Nguyen Thi Hong said at the forum that despite its important role and connection to many production fields, lending for real estate trade and investment was risky and needed to be controlled. “Our view is that banking credit must focus on manufacturing and business, especially areas that the government encourages,” she said.

The association cautioned that “visible slowdown, stagnation and shrinking liquidity” are worrisome signs of uncertainty in the domestic real estate market.