Unlocking Real Estate Credit Growth: Navigating the Cycle

Real Estate Credit is Making a Comeback

One of the key factors in bringing capital back to the real estate market is the accelerated progress in legal completion. Photo: Le Vu

Credit growth in the first five months of 2025 is estimated at approximately 6.7%, nearly double that of the same period last year. According to data from the Ministry of Construction and the author’s calculations, real estate credit growth in Q1-2025 stood at 7.49%, significantly higher than the overall market growth of 3.91%. This positive momentum reflects simultaneous improvements in both supply and demand, as lending rates remain at low levels.

A crucial factor in attracting capital back to the real estate sector is the accelerated progress in legal completion. Several important draft laws, including the Land Law (amended), the Real Estate Business Law, and the Housing Law, have been passed by the National Assembly to create a synchronized legal framework. These laws provide clear guidelines for enterprises to determine land values, develop land funds, and expedite project implementation.

In 2024, credit for the real estate business sector increased by 29.4%, far surpassing the overall credit growth of 15.08%. Notably, credit for land use rights purchases surged by 133%, while credit for housing and urban development increased by 31.6%. In Q1-2025, credit for housing and urban development remained a bright spot, rising by 19.6% compared to the end of 2024, outperforming the industry average of 7.49% and the overall market growth of 3.91%. Despite delays in guiding documents, the policy orientation has somewhat bolstered investors’ confidence in restarting stalled projects.

In reality, lending rates for home purchases have significantly decreased compared to last year, now ranging between 8-10% annually. Some banks even offer short-term promotional packages with rates as low as 5-6% in the first two years, making it easier for first-time homebuyers to access capital and stimulating market demand. Additionally, significant progress has been made in social housing policies, encouraging more enterprises to enter this segment. Providing affordable housing not only meets genuine demands but also boosts credit due to better capital absorption from the market.

Moreover, 2025 marks the year of accelerated public investment, with numerous key infrastructure projects underway and expected to be completed. This provides a significant boost to the real estate market in satellite areas, as many investors seize the opportunity to initiate new projects, anticipating the wave of shifting residential and investment demands.

An Additional Boost from State-Owned Enterprises

Following the positive credit signals, another significant change has been approved by the National Assembly regarding the Law on Management and Use of State Capital Invested in Production and Business (amended). The new law expands the scope for state-owned enterprises (SOEs) to participate in real estate investment and business, provided it aligns with their primary industries or is included in their development strategies approved by authorized agencies. This marks a significant shift from previous strict restrictions on SOEs’ real estate investment activities.

The relaxation of legal constraints, increased autonomy for state capital owners, and evaluation of investment efficiency based on overall business results empower SOEs to proactively and efficiently utilize land and public assets. Their participation also expands the supply force in the market, enhancing competition and improving the diversity of products.

In the long run, if large SOEs leverage their advantages in land resources and financial capabilities to develop social housing, satellite cities, or industrial real estate, the market will benefit from both scale and quality improvements.

Positive Outlook but with Proper Guidance

The outlook for the real estate market in the second half of 2025 is relatively positive, supported by several fundamental factors. Low-interest rates, improved legal frameworks, and rebounding housing demands after a prolonged suppression are key drivers of the market’s recovery.

However, this recovery also brings some warnings. Housing prices in many areas remain significantly higher than the average income of urban residents, especially for first-time homebuyers. If not properly controlled, the gap between prices and affordability can lead to a potential supply-demand imbalance in the medium term. Therefore, the market structure needs adjustment to focus on genuine demands, offering reasonable prices and products that match buyers’ payment capabilities.

Moreover, amidst the volatile global economic landscape, with prolonged inflation in major economies, rapid shifts in monetary policies, and geopolitical tensions, the domestic market must remain cautious about potential shocks that could change lending rates and credit conditions. This presents a delicate balancing act between growth stimulation and systemic safety—a challenge that warrants close monitoring in the upcoming period.

Lao Trinh

– 19:00 21/06/2025

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