The supply of real estate is negatively affected by the policy of tightening capital
The tightening of capital into real estate, especially the bank credit channel and corporate bonds, is a relatively clear signal from the authorities. Bank credit and corporate bonds are the two main capital mobilization channels for real estate projects in all segments. The growth rate of real estate credit loans has slowed down after many years, as a result of the control and tightening of money flows into this industry.
The State has policies to tighten real estate capital
Capital poured into real estate is tight
Thus, the source of bank credit for real estate business (investment in real estate projects) not only decelerated, but also decreased in proportion. Real estate businesses that want to maintain a normal growth rate are forced to find other sources of capital.
Corporate bonds are one of the top choices, second only to bank credit. However, after the cancellation of more than VND 10,000 billion in bonds of Tan Hoang Minh group of businesses, both the authorities and the public are gradually becoming afraid of this form of capital mobilization.
Real estate businesses will no longer be free to issue bonds as before, because the intervention to cancel the issuance results is difficult to predict. Capital for real estate needs to be cleared, to ensure a transparent and healthy development of the real estate market.
Demand for real estate, especially residential real estate, is constantly increasing, with the main driving force coming from the young population structure and strong urbanization rate. The supply of real estate has so far failed to meet the growth rate of demand, due to bottlenecks in project licensing procedures…
The demand for real estate has increased continuously for many years, which is one of the reasons why the government has to tighten this problem
The housing market in Ho Chi Minh City witnessed a sharp increase in prices from 5-10% within just one month. In the situation that raw material prices tend to increase sharply due to geopolitical instability, the capital needs of real estate businesses are becoming more and more urgent. Supply growth may be negatively affected by the policy of “locking the valve” on credit and corporate bonds.
Negative effects when tightening financial resources poured into real estate
Blocking familiar sources of finance (bank credits and corporate bonds), while attracting funds from other financial products (real estate investment funds – REITs, Housing Provident Funds, securities real estate securitization, etc.), or another channel (foreign direct and indirect investment) takes a long time to operate properly, causing the supply of real estate to be tight, pushing the price up by one unreasonable way.
Abnormally rising real estate prices drive up production costs of related industries (retail, industrial production, etc.) – which can hurt the macro economy, especially during the current sensitive period.
The authorities, besides protecting individual investors in the high-risk financial market, need to have policies to protect genuine real estate businesses. Capital needs to be unlocked for all industries in the economy, including real estate.
Issuing corporate bonds in general and real estate bonds in particular, in addition to strictly controlling issuers, should have a mechanism to minimize the participation of individual investors. vulnerable people but lack knowledge and experience. The game with corporate bonds should be a game between businesses and financial institutions, such as banks and professional investment funds, and operate according to the market mechanism.
