Wednesday , December 7 2022

PM cautions against knee-jerk tightening of credit to property sector


Banks should not tighten credit to the property sector without a reasonable cause, a decree from the prime minister issued Monday says.

Fiscal and monetary policies should be flexible though sudden transitions from tight control to looseness should be avoided, it says.

It exhorts government agencies to come up with new proposals to drive the development of the property sector.

These should resolve the current issues affecting the sector such as prices far exceeding average incomes and a lack of consistency in property databases, it says.

Banks need to prioritize credit for building houses for workers and other low-income people instead of “risky” projects, it says.

The decree also seeks to regulate mobilization of funds by property companies that seek to speculate or manipulate the market.

It wants the Ministry of Finance and the State Bank of Vietnam to closely monitor bond issuances of property development companies.

Companies in the sector issued VND42.58 trillion ($1.83 billion) worth of bonds in the first six months, the second highest behind only banks.

Authorities around the country need to prevent property price bubbles, the decree said.

Total outstanding loans to the property sector are now at over VND2,000 trillion, or 20% of all loans, according to the central bank.

Growth in lending to the property sector is set to reach 9-10% this year, it added.

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