The Ho Chi Minh City Real Estate Association (HoREA) has proposed that the State Bank of Vietnam lifts its credit growth limit from 14% to 15% to stimulate the sector.
The suggested timeline for such a move is from the beginning of December to the Lunar New Year holiday which will start on January 20.
This would pump VND100 trillion ($4.1 billion) into the market, it said.
The credit should be accessible to real estate developers, house buyers and investors when it comes to fully legal projects, feasible or under-construction, as well as affordable and social housing projects.
Currently, developers, buyers and investors cannot access credit, leading to a liquidity crunch, the association claimed, adding that without timely solutions, the real estate market crisis could negatively affect socioeconomic stability.
"Real estate companies have seen profits plunge or made losses, with big liquidity risks. Some of them are deploying "painful" measures for survival," the association had said in a document sent to the Prime Minister last month.
More credit for the economy was crucial now, as business activities would slowly grind to a halt from early January with the Lunar New Year holiday approaching. This is just a little over 30 days from now, it noted in the new proposal.
The association argued that increased credit flow would facilitate the real estate market’s recovery and help it fix itself, while aiding house buyers with suitable loan interest rates.
In a November presentation at the National Assembly, Minister of Construction Nguyen Thanh Nghi had said that the real estate market would continue to face difficulties due to limited supply and tightened credit.
"Supply is limited while demand for low-end housing is enormous. Housing prices are much higher than what people can afford. The control of cash inflows into the real estate sector is not tight, leading to many risks. Long and medium-term supply is not available.
"Speculation remains pervasive, while there remains a lack of transparency because the relevant information system is yet to be updated," he noted.
HoREA chairman Le Hoang Chau said the country was likely to achieve the target of keeping inflation below 4%, as the consumer price index (CPI) reached only 3.02% in the first 11 months of this year and state budget revenues exceeded the annual target by 16% in just 11 months. "This showed the economy was resilient and about to bounce back and grow."
Chau also urged real estate firms to restructure themselves and their portfolios, aiming to provide more products matching market demand. They should also lower property prices, he said.
According to the State Bank of Vietnam (SBV), credit growth in the country was 12.14% between end-2021 and November 25. Growth in Vietnanese dong loans was 13.16%, while foreign currency loans saw a negative growth of minus 4.92%.
In the middle of the year, the SBV started to tighten lending conditions for the property market. In a bid to raise transparency, the government has also tightened control over the corporate bond market, a channel that property developers often used to mobilize cash via private placements.
The government on September 16 issued Decree 65 on private placements of bonds to amend and supplement Decree 153, requiring transparency for bond issuance purposes.
Apart from the bank credit tightening and Decree 65, the cancellation of Tan Hoang Minh's nine bond issuances in early April due to its provision of "untrue information" and the arrest of Truong My Lan, chairwoman of property developer Van Thinh Phat Group, for alleged fraud in the issuance and trading of corporate bonds have also narrowed down the bond market over safety concerns.
According to Chau, Vietnamese property developers, facing the current tough time, might seek asset sales, and potential buyers are foreign firms.