The real estate channel will tighten several cash flow signals

DNHN - The State Bank representative has formally indicated that there is no policy to limit credit. However, the draft amending Circular 39/2016 has several indications that capital flow will be restricted with this investment channel.

The Vietnam Association of Realtors (VARS) released the second quarter real estate market report on July 15.

As a result, the agency stated that inflation threw a shadow over the economy in the first half of the year, and cash flow showed symptoms of slowing. Liquidity has significantly diminished, and the strategy of tightening credit and limiting supply has driven up house prices, far surpassing most people's purchasing ability.

According to the article, “After only one week of reopening the channel to seek funds for bills on June 21, the State Bank has received over 85,000 billion dongs. Despite the possibility of monetary tightening, this signal indicates that monetary tightening is not far away shortly. The agency has stated that it would not raise its operating rate this year.”

Although a representative of the State Bank has formally said that there is no policy of loan tightening, according to VARS. However, the draft amending Circular 39/2016 has several indications that capital flow will be restricted with this investment channel.

Specifically, the State Bank has recommended stronger rules on the process, circumstances, papers, processes, loan usage plan, repayment plan, and so on of loans to acquire houses for a living.

Furthermore, the drafting agency introduced a series of capital requirements that compel banks not to lend, such as loans for customers to prove their financial capacity in transactions with third parties; and loans for customers to prove their financial ability in dealings with other parties. Loans for project deposits are ineligible...

According to the research, the credit policy and judgments of the authorities regarding real estate corporate bonds in the past led the real estate supply to quickly slow down.

The apartment segment alone has almost 22,800 units for sale in the first half of 2022, with more than half of them being low-rise flats and land plots. The majority of the flats are from previously advertised projects, and the licensing status is quite constrained. The unit absorption rate is expected to remain at 51 per cent in 2021.

PV