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Make capital source into the real estate market healthy

14:00 | 27/05/2022

VCN - According to experts, controlling capital in the real estate market is necessary to avoid risks for this market and the economy.

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Attention should be paid to providing credit for projects that are in progress and preparing to bring real estate products to the market. Photo: RT
Attention should be paid to providing credit for projects that are in progress and preparing to bring real estate products to the market. Photo: RT

Be cautious about capital inflows into real estate

Le Hoang Hoan, Chairman of the Board of Directors, General Director of Dat Viet Group:

The real estate credit control policy is a solution to limit speculative activities, help the market become transparent, and avoid real estate bubbles. This is necessary to make the real estate market healthy and reduce risks to the economy amid the hot real estate market in recent times. The State needs to have policies and solutions to affect and regulate the real estate market reasonably to create motivation and develop a transparent and sustainable real estate market, minimize all risks, and create resources for socio-economic development.

Nguyen Van Dinh, Vice Chairman of Vietnam Real Estate Association:

Vietnam Real Estate Association proposed not to tighten credit policies on real estate. Instead, have a good control policy with projects with problems, speculation, hoarding, buying and collecting land, and prices. The rest should be promoted and encouraged. For the issuance of bonds of real estate enterprises, it should continue to be maintained but needs to have new regulations to control, promote transparency, and health, making the market clean. At the same time, promote and form real estate investment funds so that businesses can get early access.

Economist Vu Dinh Anh:

I think it's not "tightening", "controlling", "adjusting" capital or any other word, the problem we are facing is that the real estate market depends on bank credit capital, so we need to make the relationship between real estate, finance and economy healthy. Therefore, the word “control” capital should be replaced by “make healthy”. I want real estate, land and planning policymakers to have the right policies for the real estate market to develop. The policy must not only solve the immediate problem but also solve the basic and core problems of the economy, based on the market mechanism. Regarding corporate bonds, the corporate bonds themselves are not wrong. Currently, we are talking about three-zero corporate bonds: no collateral, no credit rating, and no payment guarantee. In my opinion, the biggest foundation of corporate bonds must be credit rating. In principle, corporate bonds must ensure credit ratings. At this point, Vietnam must build a corporate bond market according to international practices, which must be healthy and transparent.

H.A(record)

Basically, the operating capital flow into the real estate market includes credit from the commercial banking system, public investment capital, capital from real estate enterprises; capital from the stock market, corporate bonds, FDI capital, remittances, potential investors, and investment funds.

Of which, capital from credit and corporate bonds are the "mainstream" of the real estate market.

Recently, the growth of the real estate market with the massive participation of investors surfing and using financial leverage from bank loans has caused risks for the real estate market as well as the monetary and financial market, leading to strict control and restrictions on credit by authorities in the real estate sector.

Assoc. Dinh Trong Thinh said that tightening real estate credit was necessary to prevent banks from lending to the “backyard”, shaking hands with real estate businesses to buy bonds of real estate enterprises to reverse debt; to limit speculative money in real estate to push up prices, avoid creating real estate bubbles, and to remove investors and businesses that use large credit leverage to do business.

However, Thinh also said that measures were needed so that the real estate market could recover and develop, meeting the recovery and growth needs of the national economic sectors and ensuring social security. Accordingly, it is necessary to flexibly consider the level of real estate credit to suit each bank and project; and simultaneously promote credit lending for projects of affordable apartments, mid-range apartments, and social housing.

“We need to promote lending to businesses with good financial capacity that are able to concentrate resources for focused investment, and soon bring products to market. In particular, pay attention to providing credit capital for projects in progress and preparing to bring real estate products to the market. This is necessary because if the supply of real estate cannot meet the increase in demand, it will push up prices and lead to many consequences. Thus, we have an appropriate selection when providing loan sources for the real estate market,” said Thinh.

Emphasizing that in the current context, it is important to clear capital flows for real estate in an effective, safe, and healthy manner, Dr. Vu Tien Loc, Chairman of the Vietnam International Arbitration Center, said that besides increasing the quantity of capital flows, the "quality" of capital flows of the real estate market should be of top concern. However, he also believed that it was necessary to "control the flow" of capital in the direction of opening and controlling, not suffocating.

Take reasonable control

Controlling credit to real estate is a good thing to do, but in the long term, this may lead to the risk of a lack of capital for this market due to the double impact of the Covid-19 pandemic. Dr. Can Van Luc said that it is necessary to have reasonable control of capital in real estate, and this is very important. Management agencies need to "fix" capital flows, not "suffocate" them into real estate, and focus on regulating supply-demand.

From the perspective of businesses, Le Hoang Chau, Chairman of HCM City Real Estate Association, said that the implementation of a tight monetary policy might lead to a freeze in the real estate market. Therefore, the real estate market should not be tightened, but should control lending to businesses and borrowers and use loans for the right purposes. Affirming that a roadmap to limit credit in the real estate sector is necessary, he recommended reducing this progress until the end of 2023. Regarding the issuance of corporate bonds, Chau said that we need to review and amend the legal regulations so that the issuance is strictly controlled, ensuring the legitimate rights and interests of investors, avoiding the situation that enterprises take advantage of it for profit, even fraud.

Regarding this issue, Nguyen Manh Khoi, Deputy Director of the Department of Housing and Real Estate Market Management (Ministry of Construction), said at this time, from a management perspective, it is advisable to reasonably control capital flows into the real estate market. Credit capital still has to run into investment real estate, especially, priority should be given to ongoing real estate projects to quickly supply products to the market. Simultaneously, more attention should be paid to funding to promote affordable housing supply as well as boost supply in the social housing sector. Affirming that the current real estate market has opportunities, but also challenges, the representative of the Ministry of Construction emphasized the need to focus on controlling capital sources and having the right and long-term orientation.

According to experts, there should be regulations on grouping real estate segments and classifying businesses to have appropriate credit and capital policies. Along with that, to diversify capital sources for real estate, in addition to the two main channels of capital, which are credit and corporate bonds, it is necessary to have guidance and permit the establishment of specialized real estate financial institutions, housing savings agencies, real estate investment trusts (REITs), and real estate finance agencies that mortgage houses, securitize real estate. At the same time, it is necessary to have a suitable real estate tax schedule to avoid the situation where capital is poured into real estate speculation.

By Hoai Anh/ Ha Thanh