Commercial banks in Vietnam are shutting off credit flows to the property market, pushing real estate investors into a severe lack of capital, Vietnamese state media reported.
The credit crunch is not only having a negative affect on property investors, and banks also refuse to l to private individuals who wish to borrow money to buy their own home.
Trapped in a difficult position, many construction companies have deliberately slowed the speed of their underway projects. They are prepared to wait until macroeconomic stability returns.
An apparel firm in HCM City has been forced to delay the construction of a commercial and office center planned for District 5 after two partners postponed their involvement due to the acute credit shortage.
Realty investors with existing loans are squeezed by dramatically rising interest rates and pressure from banks to pay back debts. Some property investors have reluctantly sold properties at low prices to settle debts, or to raise capital.
Some enterprises have chosen to issue bonds to raise money &ndash but this isn&rsquot an option available to everyone. &ldquoIf only people believed that an enterprise would be able to acquire capital from the banks, it is able to issue bonds,&rdquo said Tran Minh Hoang, chairman of the Vinaland Real Estate Company.
The best solution at the moment would be for the government to re-examine its Real Estate Law, Finance Law, Penal Code and Land Law, he said.
International property companies obtain capital from many sources, such as insurance funds, retirement funds, the state and financial agencies.
Vietnam&rsquos real estate industry, however, is almost completely reliant on the banks. If the domestic banking industry continues to restrict loans for property, the supply already a chronic problem in the country will only get worse.
Dang Hoang Vu, director of the Thanh Binh Real Estate Trading Joint-stock Company, blames the banks for the current situation.
Private individuals with average household income are also being hit by rocketing interest rates. Unable to buy a house without a bank home loan, house-hunters must be prepared to take on a debt with an interest rate as high as 21 per cent. (VietnamNet)
Vietnamese
