Vietnam's property market downturn slows, government prepares reforms to revitalize sector

Vietnam's property market downturn slows, government prepares reforms to revitalize sector

In 2020, Vietnam's real estate market began a challenging period of decline. The global pandemic was the obvious initial problem, which did not loosen its grip on the world until the end of 2021. However, the long-awaited recovery did not materialize as another issue emerged - a broad campaign against corruption and tax evasion, which had flourished in the real estate sector.

It's not until the end of 2023 that analysts begin to confidently confirm the slowing of the market's decline, although some problems remain. Police continue to investigate a billion-dollar fraud case, developer Novaland Investment Group is still in dispute with creditors over $300 million in bonds, and the Asian Development Bank warns of the risk of real estate problems spilling over into the banking sector.

However, the government has taken advantage of the stabilizing situation to begin reforming the sector to stimulate economic activity in the market. Prime Minister Pham Minh Chinh has introduced several solutions to provide the necessary stimulus. Interest rates on loans are already being reduced, and requirements for property purchase loans are being simplified.

Pham Minh Chinh has also instructed the State Bank of Vietnam (SBV) to work with private banks to create special credit lines for businesses in the real estate market. The process of simplifying requirements for potential borrowers and further reducing interest rates is underway. The SBV, in cooperation with the Ministry of Construction, is also tasked with developing a credit support program for social housing construction.

The Ministry of Construction has recently published new data on the real estate sector, indicating an increase in the number of new loans from developers in the market. By the end of August, the volume of debt of companies in the sector reached $41.6 billion, showing an annual increase of 23.3%. However, the volume of new loans to individuals remained relatively low during the same period. Some private banks reported an annual increase of 45-48% in business loans issued.

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