Tightening loans for buying second and third homes, can it prevent speculation and inflation of real estate prices?

(NLDO) - The Ministry of Construction proposed tightening the loan limit for second and third home buyers, but opinions say that this interferes with the bank's capital market.

The Department of Housing and Real Estate Market Management, Ministry of Construction is seeking opinions on the content of the draft Resolution of the Government on the mechanism to control and restrain real estate prices.

Accordingly, to implement the reduction of housing prices, this agency proposed 3 control mechanisms, notably the solution to limit loans when buying a second home or more. The next two proposals are to reserve at least 20% of housing projects for "affordable housing" and transactions through the State-managed floor.

Regarding the lending policy for home buyers, the Ministry of Construction proposed that the Government require credit institutions operating in Vietnam to apply a lending limit for home loans, except for social housing.

Specifically, in the case of buying a second home, the loan limit is not more than 50% of the value of the home purchase contract. In the case of buying a third home or more, the loan limit is not more than 30% of the value of the home purchase contract.

Talking to a reporter from Nguoi Lao Dong Newspaper, economic expert, Dr. Dinh The Hien said that he understood that the Ministry of Construction wanted to restrain real estate speculators by tightening the loan limit. "However, this policy seems to be interfering with banking operations and monetary policy. The real estate market in particular, and the financial and credit market in general, need long-term stability, and should not seek short-term solutions. In principle, it is necessary to respect the market economy, real estate is a large industry, and needs to be developed in the right direction" - Dr. Hien said.

According to Mr. Dinh The Hien, the market nature lies in the investment choices between banks, investors and developers. The State should decide based on planning and protect the legal regulations approved by the National Assembly. If the credit tightening policy as proposed by the Ministry of Construction takes effect, it will greatly affect the real estate market in the context of this market being difficult and not meeting the needs of the majority of people with housing needs.

The Ministry of Construction is seeking opinions on the content of the draft Resolution of the Government on the mechanism to control and restrain real estate prices.

Can we prevent speculation, hoarding, and inflating real estate prices?

Associate Professor Dr. Pham The Anh, National Economics University, also said that limiting the lending rate will help limit credit flowing into real estate speculation, but it will be difficult to prevent speculators who do not use borrowed capital. Banks that rely heavily on real estate lending (speculation) will be more affected. In particular, speculative behavior of hoarding and inflating real estate prices is difficult to stop when the profit level is high.

Regarding the real estate credit control policy, the Research and Analysis Department of Maybank Securities Company believes that this is the right direction, which has been pursued by management agencies for many years to minimize systemic risks. However, in the context that the real estate industry contributes about 14-15% of GDP and spreads to more than 40 other industries, credit policy needs to be implemented in a reasonable, flexible manner and linked to market mechanisms. If the real estate market develops healthily, capital flows into this sector will bring high economic efficiency and not create significant risks for the financial system.

"Credit risks can be significantly reduced if the market achieves two important conditions: housing supply and demand are balanced in both quantity and price, avoiding a prolonged phase difference; and the transport infrastructure system is promptly improved to meet the trend of population dispersion and satellite urban development - especially in the context of the trend of super-urban areas and urban expansion to suburban areas is clearly increasing" - Maybank expert said.

Source: https://nld.com.vn/siet-cho-vay-mua-can-nha-thu-2-thu-3-co-ngan-duoc-dau-co-thoi-gia-bat-dong-san-196251008154647824.htm