No irrational credit restrictions should be imposed on the real estate sector as the nation strives to develop a sustainable and safe market, Prime Minister Pham Minh Chinh said Thursday.
“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,” he said at a forum.
The central bank (SBV) had earlier confirmed 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.
Central bank data shows that total credit for the real estate sector in Jan-May this year reached VND2,330 trillion ($99.5 billion), up 12.31% year-on-year. The figure is higher than in the previous years, accounting for 20.66% of total credit in the economy, Hong noted.
She further said that 94% of the real estate credit in the market was medium- and long-term loans (between 10 years and 25 years), while 80% of banks’ mobilization was short-term deposits with market-based interest rate variations.
“Our view is that banking credit must focus on manufacturing and business, especially areas that the government encourages,” she said.
Minister of Construction Nguyen Thanh Nghi pointed to tax policy problems, saying it failed to distinguish between real users of properties and traders, thus failing to control speculation and hoarding for speculation.
Nguyen Ngoc Bich, Deputy Minister of Planning and Investment, echoed Nghi, arguing that tax instruments must be utilized to rein in speculation.
In response, the prime minister asked the Ministry of Finance to research and issue new taxation regulations aimed at preventing speculation and losses to the state coffers in real estate transactions.
The SBV has set a credit growth target of 14% for the year higher than in the previous two years (13.6% in 2021 and 12% in 2020). Credit expanded by 9.35% in the first half of this year, higher than the same period in pre-pandemic years.
Hong said credit growth target of 14% was set in expectation of rising inflationary pressures in the coming months.