Fears of another property market bubble forming in Vietnam have crept up recently as the real estate market has shown signs of life, but state management agencies told Thanh Nien Daily that the market would be closely watched to prevent it from happening again.
The recovery of the market in Vietnam reflected in the rising number of successful transactions and soaring prices was not the result of speculation as has previous been the case, Construction Minister Trinh Dinh Dung noted.
There were 14,000 transactions recorded in the first half of 2015. This is double the number of transaction that occurred in same period last year. He added that the recovery was due to Government measures addressing problems in the property market coupled with the housing development strategy implemented in the years after the 2008 market crash in Vietnam.
Trinh Dinh told Thanh Nien Daily that it is impossible to avoid speculation during the recovery period, and that tightening management to stop the type of overheated growth that would create a property bubble is vital. Preventing speculation in the country will require the relevant ministries and organisations to work together. The banking sector, in particular, must have tight control over the credit flow into the property market to ensure speculation is kept to a minimum.
Easy access to credit lines was one of the main factors that fuelled the property bubble of 2006-2007. This led to huge non-performing debts in the real estate sector when the bubble burst in Vietnam a year later.
Tran Du Lich, a member of the National Monetary and Financial Policy Advisory Council, said it was good to see the rising capital flow into the country’s property market, but warned that banks must control the growth of outstanding loans in the real estate sector to avoid risks.
The property sector in Vietnam has received increasing capital flows from banks, foreign direct investment (FDI) and overseas remittances from the beginning of this year that has led to the turnout of the country’s property sector, the newspaper reported.
