The Flow of Capital: Unlocking the Real Estate Market

Real Estate Credit Surges

According to the State Bank of Vietnam, as of May 28, total credit outstanding in the economy reached over VND 166 trillion, up 6.32% from the beginning of the year.

Data from the Ministry of Construction shows that real estate credit in the first quarter of this year grew by 7.49%, significantly higher than the overall market growth of 3.91%. This positive momentum reflects simultaneous improvements in both supply and demand, amidst a backdrop of persistently low lending rates.

A notable bright spot is the rebound in credit for social housing after a period of adjustment. As of April 2025, total outstanding social housing credit reached VND 2,764 billion, up 4.84% from the previous month, the highest increase in the last three months (up 1.7% in March and down 2.55% in February).

This impressive recovery stems from commercial banks actively offering preferential credit packages for low-income earners. Flexible loan packages with competitive interest rates and affordable repayment terms have provided added motivation for homebuyers, while also boosting capital inflows into the social housing segment.

In addition to traditional social housing loans, many banks have been introducing new credit programs targeting young people, such as exclusive packages for individuals under 35 years old. These initiatives help address housing needs for young working adults, especially in major cities like Hanoi, Ho Chi Minh City, and Haiphong.

A deputy branch director of a Big4 bank in Haiphong shared: “The fixed interest rate of 5.5% for three years has attracted many young families to take out loans to buy houses, with strong disbursements since the beginning of May. Currently, housing prices in Haiphong are much lower than in large cities like Hanoi and Ho Chi Minh City, which has led to a significant increase in disbursements at our branches.”

Real Estate Credit Not “Overheating”

Real estate credit remains a pivotal component of banks’ lending portfolios. The outlook for the real estate market in the second half of 2025 is relatively positive, given the sustained low-interest-rate environment and improving legal framework…

However, this recovery also warrants some caution. Housing prices in many areas remain significantly higher than the average income of urban residents, particularly for first-time homebuyers. If left unchecked, the disparity between prices and affordability could lead to a potential supply-demand imbalance in the medium term. Therefore, the market structure needs adjustment to focus on actual demand, with reasonable price levels and products that match repayment capabilities.

Dr. Nguyen Huu Huan, an expert from the University of Economics Ho Chi Minh City, opined that after a stagnant period, the real estate market has shown positive recovery signals, resulting in a significant increase in real estate credit outstanding, but it has not reached an “overheating” level yet.

Nonetheless, Dr. Huan cautioned that while banks have credit allocation strategies and risk management solutions, an excessively large and prolonged proportion of real estate credit could impact the resources available for other priority economic sectors.

“Therefore, it is necessary to accelerate the implementation of credit packages for other sectors, such as the VND 500 trillion package for science and technology, innovation, and strategic infrastructure. Continued exploration of supportive credit policies for production and business sectors, especially exports, is crucial to promote healthy credit flows and support sustainable economic development,” Dr. Huan suggested.

Mr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, also emphasized the need to diversify funding sources for real estate businesses. Currently, over 50% of capital for real estate businesses comes from bank credit, while banks rely on short-term capital for long-term lending, posing significant risks to the financial system.

According to Mr. Dinh, unlocking other capital channels such as bonds, bills, investment funds, and development funds is essential. These alternatives have been discussed for over a decade, but legal obstacles have hindered their implementation.