Why Is Credit Pouring into Real Estate?

Contextual Credit Growth

At the State Bank of Vietnam’s Q3 press conference on October 3, Ms. Hà Thu Giang, Director of the Credit Department for Economic Sectors, revealed that by the end of August, real estate credit had surpassed VND 4 quadrillion, marking a 19% increase. This lending outcome in recent months aligns well with the context of the National Assembly and the Government’s implementation of various solutions to address market challenges.

According to Ms. Giang, numerous previously stalled projects have resumed, driving up capital demand and boosting real estate credit. Recent months have seen the introduction of multiple legal policies, support mechanisms, and specialized credit packages, aiding businesses and investors in overcoming obstacles. These measures have not only revitalized project supply but also bolstered market confidence, laying the groundwork for a more robust recovery in the upcoming period.

“With ongoing solutions, from 2026 onwards, as major projects commence and restart vigorously, real estate credit demand will continue to rise. This will be a pivotal moment for the market to surge ahead, provided supportive policies remain consistent,” Ms. Giang predicted.

Ms. Giang added that credit structure remains heavily focused on production and business, alongside priority credit packages for agriculture, real estate, and infrastructure.

As of August, approximately 78% of outstanding credit was allocated to production and business activities, with the remainder primarily serving consumption needs.

The agriculture, forestry, and fisheries sector is set to implement a VND 185 trillion credit package.

For the social housing development credit program, VND 4.7 trillion has been disbursed to date, a 66% increase compared to the same period last year.

“Commercial banks have proactively collaborated with ministries, sectors, and localities to accelerate disbursement, meeting public demand,” Ms. Giang stated.

Annual Credit Growth May Reach 20%

Mr. Phạm Chí Quang, Director of the Monetary Policy Department at the State Bank of Vietnam, added that at the current pace, this year’s credit growth could hit 19-20%, the highest in the past 15 years.

According to the monetary authority’s data, this year, to facilitate credit institutions in supplying capital to meet economic growth needs, on December 30, 2024, the State Bank of Vietnam issued a document to credit institutions announcing the entire credit growth quota for the year, transparently outlining principles for banks and credit institutions to proactively implement.

With inflation controlled in line with National Assembly and Government targets, and under the Government and Prime Minister’s guidance on effective credit growth management to meet economic capital demands, on July 31, the State Bank of Vietnam announced an additional credit growth quota adjustment for credit institutions based on specific, transparent principles.

This quota increase is a proactive measure by the State Bank of Vietnam, requiring no requests from credit institutions. The State Bank of Vietnam directs banks to pursue safe, effective credit growth, channeling credit into production, business, priority sectors, and economic growth drivers as guided by the Government and Prime Minister, while tightly controlling credit in high-risk areas.