Credit for real estate increased by over 6 percent since the start of the year.

DNHN - Credit institutions extended to the real estate sector 2.74 million billion VND on September 30, an increase of 6.04% from the start of the year, as reported by the State Bank (SBV).

As a result, real estate sector lending activities increased by more than 6 percent as of September, with outstanding loans for real estate business activities of investors increasing by approximately 22 percent.

The State Bank has recently updated loan data in the real estate sector during an online conference concerning the execution of the Prime Minister's telegram to alleviate challenges in the real estate market. As a result, as of September 30, credit institutions extended to the real estate sector 2.74 million billion VND, an increase of 6.04% from the start of the year, according to the State Bank. Credit designated for consumption purposes comprised 64% of the total, while outstanding loans for real estate business activities constituted 36% of the balance.

Credit allocated for real estate business activities amounts to approximately 986,400 billion VND, as indicated by this proportion. Both the proportion and growth of this segment will experience a significant surge in comparison to 2022.

The proportion of real estate business loans comprised of credit grants to project investors was 31% in the previous year. By the end of 2022, this proportion is projected to increase to approximately VND 800,000 billion. Real estate business credit increased by approximately 22% during the initial nine months of the year.

According to the State Bank of Vietnam, real estate business credit expanded at a faster rate than the overall credit rate and the corresponding period in the previous year during the initial nine months of this year. This demonstrates that the government, the banking industry, ministries, branches, and localities have, to varying degrees, been successful in implementing solutions and overcoming obstacles.

As per the evaluation conducted by the management agency, the real estate industry continues to encounter numerous challenges, several of which have endured. These include issues about legal procedures, segmented supply and demand imbalances, and market demand. Certain market segments have experienced significant declines, businesses continue to have limited financial capacity and rely primarily on external capital (bonds and loans), and home prices remain elevated.

Numerous large private banks' real estate business loan balances increased substantially during the first nine months of the year, according to their financial reports for the third quarter. Amidst a dearth of economic demand for consumer credit, the aforementioned banks also exhibit the most substantial loan growth rates within the system.

In the first nine months of this year, outstanding loans for this sector at VPBank increased by over fifty percent, or by over two hundred and seventy billion VND. As of the conclusion of the third quarter, Techcombank had accumulated outstanding debt for real estate business activities exceeding 160,000 billion VND. This figure represents a growth of over 40% when compared to the initial quarter of the year.

Credit flow into the real estate sector is one of the most rapidly expanding segments of MB during the initial nine months of 2023. After the period, the total outstanding debt amounted to 34,500 billion VND, reflecting a growth of over 13,000 billion VND.

Alternatively, compared to the start of the year, outstanding debt for real estate business activities at SHB surpassed 66,000 billion VND by the end of the third quarter, an increase of over twofold. In a similar vein, since the start of the year, HDBank has approved nearly 15,000 billion VND in real estate business loans.

Before this, the Prime Minister requested the Governor of the State Bank, in Official Dispatch No. 993/CD-TTg dated October 24, 2023, to direct commercial banks to continue promoting credit lending to the real estate sector.

Simultaneously, financial institutions are obligated to implement suitable cost-reduction strategies to mitigate interest rates, while also continuing to assess and eliminate unnecessary, burdensome, and expensive administrative processes. Thus facilitating the access of businesses, real estate projects, and homebuyers to credit capital.

Nhan Ha