The real estate market is facing serious liquidity problems: conference

VIETNAM, June 8 –

Lê Hoàng Châu (standing), president of the HCM City Real Estate Association, speaks during a conference on the financing of the real estate sector in HCM City. Photo VNA/VNS

HCM CITY – With the property market facing liquidity problems, analysts have called on the government and the banking industry to create a mechanism for property developers to borrow and issue bonds.

Speaking yesterday at a seminar on sources of capital for the real estate market, Lê Hoàng Châu, president of the Real Estate Association of HCM Minh City, said: “The market is facing serious liquidity problems. “.

Corporate equity accounts for only 15-20%, while the remaining 80-85% comes from bank loans, bond issuance, home buyers and foreign investment, he said.

“Bank credit is one of the most important capital raising channels for real estate businesses and a lack of lending will greatly affect them.

“With the current lending restrictions, developers need to shift to issuing corporate bonds.”

He suggested changing a decree on bond issuance to make it a healthy channel for the market.

Dr. Đinh Trọng Thịnh of the Finance Academy said the tightening of corporate bond issuance should be done with a roadmap, slowly and step by step.

“If the brakes are applied too suddenly, it would cause market shocks and risks to the overall economy.”

Lê Thành, president of the Green Economy Institute, said the real estate market contributed 14% to the country’s GDP in 2019-21 and had a ripple effect on around 40 other sectors. such as construction, processing, tourism, accommodation and catering, and finance. and banking.

In April, the central bank began tightening credit for the real estate sector, he said.

“Tightening bond issuance and mortgage lending has caused market difficulties.”

According to the Ministry of Construction, in the first quarter of this year, there were only 24 completed real estate projects, half the number of the previous quarter and the previous year.

The number of projects eligible for sale was just 56, down two-thirds from the previous quarter, and low supply pushed prices up dramatically, he said.

Đào Minh Tú, vice-governor of the State Bank of Việt Nam, said the focus was on controlling credit risk to ensure market transparency and prevent a bubble.

But lenders would only tighten credit to high-risk segments to prevent speculation, not segments like housing for workers and the poor, he said.

Lê Xuân Sang, deputy director of the Việt Nam Institute of Economics, said it was essential to improve existing channels while promoting new channels such as real estate investment trusts (REITs).

Ngô Trí Long, former director of the Ministry of Finance’s Price and Market Research Institute, said the central bank and credit institutions must ensure stable overall credit growth and lending quality to the real estate sector. .

Loans to the real estate sector represent nearly 20% of total outstanding loans, according to the central bank.

At the end of April, total loans outstanding to the sector were VNĐ2.3 quadrillion, up 10.19% from the end of 2021, accounting for 20.44% of total loans outstanding. —VNS