What to do to curb the "overheating" of the real estate market?

DNVN - The Vietnam Association of Realtors (VARS) has just proposed a number of solutions to curb the "overheating" of the real estate market, based on lessons learned from previous countries.

According to VARS, the real estate market in Vietnam often faces many major challenges, from bad debt, high real estate inventory, to difficulties in capital mobilization and declining investor confidence. These difficulties not only directly affect the development of the market but also cause widespread consequences for the entire economy .

Therefore, on the basis of maximum respect for the natural laws of supply and demand, it is extremely necessary for the State to proactively strengthen regulation of the real estate market when the market shows "signs of instability".

In the world , to ensure the sustainable and stable development of the real estate market, many governments have used credit policy as a tool to regulate the real estate market. By tightening or loosening credit, the government can control real estate prices, prevent bubbles and ensure market stability.

Credit policy is an important tool to regulate the real estate market.

However, VARS believes that the flexibility in this policy depends on each market and the specific economic situation and experience of each country.

In China, to control the flow of investment capital, the Chinese government imposed many restrictions on the purchase of real estate using credit, especially loans for speculation. They also controlled the flow of capital abroad to prevent speculative money from flowing into foreign real estate markets.

In Singapore, in order to control speculation and prevent a real estate bubble, the Singaporean government has increased the minimum deposit rate when borrowing to buy real estate, especially for second or third home buyers. At the same time, to reduce the loan amount and control real estate prices, the government has also limited the loan term combined with a tight credit policy.

In the US, after the 2008 financial crisis, the US Federal Reserve (FED) lowered interest rates to boost the economy and stimulate home buying demand. However, the FED also applied stricter credit standards to borrowers, requiring a better credit history to prevent risks from subprime mortgage loans.

Experiences of other countries show that credit policies and laws are one of the important tools for governments to regulate the real estate market. Many of the policies that have been successfully applied by other countries can be completely referenced, learned, and applied to Vietnam.

Based on lessons learned from previous countries, in order to curb the "overheating" of the real estate market, VARS proposes a number of credit policy solutions to regulate the market when there are fluctuations.

Specifically, VARS recommends tightening credit policies for speculators. To reduce the number of people borrowing money for speculative purposes or using too much leverage, credit institutions can adjust loan limits by adjusting the loan-to-value ratio, requiring a higher equity payment ratio, or applying higher interest rates to second home buyers or more.

The government can impose regulations on credit quality control, requiring banks to report more details on real estate-related loans, thereby strengthening risk monitoring. Establish a credit mechanism for social housing projects, prioritizing funding for social housing development projects, affordable housing, to address the housing needs of low-income people.

In addition, the State needs to have a policy of loosening credit, including reducing interest rates and supporting long-term loans with preferential interest rates for first-time home buyers, or some other priority groups for the purpose of social stability such as newly married young couples.

In order to apply the policy "correctly and accurately", VARS believes that it is necessary to build a database system that is large enough, accurate enough and highly updated to ensure a clear distinction between real home buyers, using it for real production and business purposes, and speculators and profiteers.

“To regulate the real estate market more comprehensively, credit policy should be combined with the application of real estate transfer tax or property tax. The application of regulatory policies must be flexible, ensuring stability and order in the real estate market, minimizing risks,” VARS emphasized.

Ha Anh

Source: https://doanhnghiepvn.vn/kinh-te/bat-dong-san/lam-gi-de-kim-ham-da-tang-nong-cua-thi-truong-bat-dong-san/20240928050046687