The real estate market is no longer too dependent on the bank credit lines like 2-3 years ago, but the capital inflows into the real estate market have been more diversified.
Although the real estate market has recovered strongly, according to the data of the banking sector, real estate credit tends to decrease. Real estate credit has only increased by 8 percent and only accounts for 6.5 percent of the total credit outstanding loans to the economy, down sharply from the 10 percent figure of 2-3 years ago.
The most positive thing in the real estate market is that private capital pouring into this sector is increasing, being reflected in the financial leverage index of many real estate companies with signs of increasing. In addition, Resolution 42/2017/ QH14 on the pilot handling of bad debts of credit institutions is more effective and the activity of buying and selling, transferring real estate projects is exciting.
In the coming time, there will certainly be a large amount of private money being poured into this market, thereby the financing channel will be more diversified, helping the real estate market develop stronger and reducing risks for both businesses and banks.
However, with the demand for real estate credit, medium and long-term credit, there should be solutions to develop the capital market and help businesses, including project investors, raise more capital in the market and reduced the dependence on credit.
In fact, bank credit is still directed at real estate, especially for home loan customers. It must be acknowledged that thanks to the warming up of the real estate market, the bank can deal with bad debts, thereby opening up the credit flow. However, because this market is always “consuming” large capital, while not all investors have strong financial potential, many experts worry that credit flowing into real estate will generate more bad debts for the bank.
The market needs refinement and the opportunity for investors with strong financial potential will exist and develop more sustainably. In contrast, business owners who rely heavily on bank loans will be hard to survive. That is also the reason for the bank’s guarantee for real estate projects. Along with the direction of the State Bank and risks of pouring capital into this sector, many banks have been more cautious when lending.
Although there is no sign of “real estate credit bubble” when the proportion of real estate loans of the whole banking system is currently only 6-7 percent of the total outstanding loans of the economy, while the safety level is 810 percent, but due to the high increase in consumer credit outstanding and maybe the consumption capital is being flown into real estate, it is necessary to tightly control the cash flow into this field to avoid repeated high bad debts.
