Credit Growth in Real Estate Surges

Credit in the real estate sector (including business purposes and own purposes) increased by 14.58% from the end of 2018, accounting for 19.14% total credit in the Vietnam economy.

According to the State Bank of Vietnam (SBV), by August 2019, credit in the real estate sector (including business purposes and own purposes) increased by 14.58% from the end of 2018, accounting for 19.14% total credit in the Vietnam economy.

This growth rate is much higher than the common credit growth of the whole economy. For detail, according to updates accounted to August and September, the overall credit growth reached 8-9% from the end of 2018, differences are based on the date of statistics.

Also from the State Bank of Vietnam, total credit in the economy is estimated to be around 7.8 million billion Vietnamdong. With the rate of 19.14% as mentioned above, the total finance to the real estate from the credit institutions is calculated to be 1.49 million billion Vietnamdong.

There is one outstanding difference in this current time of credit state announcement. SBV added the personal credit to the common credit. Personal credit can be understood as the credit used for rebuilding or reparing houses for personal uses.

Over the past several months, in the statistic accumulation and common announcement, real estate credit is seperated and only attached to the fund for investment and business, but not include the personal uses mentioned above.

With this seperation, National Finance Supervisory Commission (NFSC) used to mention the new kind of real estate credit, that is aimed at the consumer lending for buying and reparing houses of individuals.

State Bank of Vietnam (SBV) now has changed the way of calculating. SBV attached those groups into the credit groups of real estate in general. And this is one of the determining factor to make the high credit growth.

But in the lending activity, the current lending rules and the features of the lending sums are much different, that are the risk numbers. The investment and real estate business lending have much higher risk coefficients, almost 200 percent. While the credit for buying and repairing houses has much lower risk coefficients than 50 percent.

By DIEP NGUYEN / BizLIVE