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Commercial banks pour 210 trillion dong into real estate   2010-09-16 - VnExpress

In its latest report on real estate, the Ministry of Construction (MOC) revealed that real estate performance depends on State Bank of Vietnam (SBV) plans to adjust the monetary policies.


MOC has submitted a report to the Government on the construction industry and real estate market in 2010. The report avers that real estate continues attracting attention from foreign investors. By August 20, 2010, foreign direct investment (FDI) capital in real estate reached $2358 million, accounting for 21.8 percent of total registered FDI, an increase of 36.9 percent over the same period of 2009.


By the end of July 2010, total outstanding loans provided to the real estate sector reached 210,770 billion dong, an increase of 14.38 percent over December 31, 2009, while the bad debt ratio is low, at below two percent.


Of these, the outstanding loans given to fund new urban areas by July 31, 2010 witnessed a minus growth rate of 2.35 percent (the growth rate was 10.2 percent in 2009). The outstanding loans to fund construction, repair and purchases of houses increased by 5.47 percent only (the figure was 27.2 percent for all of 2009). The lending interest rates have stayed high, with rates applied by commercial banks staying firmly around 13 percent.


According to MOC, real estate market performance depends heavily on credit and monetary policies. For example, in the first and second quarters of 2009, when disbursement from the demand stimulus package (the four percent interest rate subsidy program) occurred, a short price increase wave took place in Hanoi and HCM City.


In the third quarter of 2009, the real estate market did not see big changes in transactions and prices, because buyers awaited the Government’s decision on whether or not to prolong the economic stimulus package.


In the fourth quarter of 2009, some market segments in Hanoi changed, but not much as there was no sign of capital support from banks. In the third quarter of 2010, together with credit tightening, the real estate market stagnated.


According to MOC, the real estate market has recovered, but not sustainably or stably. Real estate prices, especially on houses, have been very high. In Hanoi, land prices increased by 30 percent in the second quarter of 2010 over December 2009, especially in areas west of the city (Hoai Duc and Ha Dong districts).


The system of information about real estate also remains weak. MOC has proposed that the Government build a financial system that serves real estate development. Financial and monetary policies need to be flexible on two counts: they should be designed to avoid “real estate bubbles”, but they should not be too tight to cause a market collapse.


The real estate market has warmed up after the seventh month of the lunar calendar, the unlucky time considered as the month of “forsaken spirits”.


Nguyen Thi Phuong Thao from the Hai Van Real Estate Trading Floor confirmed that the number of visitors seeking to purchase houses has increased by 20 percent over the “seventh month.” She revealed that “two transactions were successful within one week, which should be seen as an encouraging result in the context of the current quiet market.”


Nguyen Tuan Lanh, Director of Thang Long Real Estate Company, agrees that it is too early to claim the market has warmed, but transaction numbers have risen. Most still want to purchase houses in western Hanoi and they are people who really have demand for accommodations, such as newly married couples.

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