The HCMC Development Commercial Bank (HDBank) has signed an agreement with the Saigon Real Estate Joint Stock Company (SAIGONRES) to provide credit and financial guarantees.

It will lend VND1.09 trillion ($48.63 million) to SAIGONRES at 6.8 per cent interest for the SAIGONRES PLAZA residential project.

The bank will also lend VND1 trillion ($45.84 million) to the G5 Real Estate Company to develop a housing project.

The Orient Commercial Joint Stock Bank has provided guarantees for Western Dragon, Topaz City and Diamond Lotus housing projects.

Some foreign banks are also keen to back property developments.

HSBC VN has signed a deal with Singapore-based CapitaLand to fund luxury apartment project Seasons Avenue in Ha Noi.

The State Bank of Vietnam reported in early September that loans outstanding to the property sector grew 13 per cent this year and accounted for 8 per cent of the total figure.

Its HCM City branch said that this year growth in lending to the property sector in the city was up 4.5 per cent to VND20 trillion (nearly $888.9 million) out of banks' total loans estimated at VND146 trillion (nearly $6.49 billion).

Many analysts see the banks' further capital injection into the real estate sector as a good sign.

Lenders are trying to expand their share of the property market since it is recovering strongly after a prolonged slowdown.

Others attribute banks' increasing lending to the property sector to their desire to increase credit growth so that their future credit growth quotas will be increased.

But many also fear that increasing credit could again cause a bubble.

The pumping in funds by banks has been a major contributor to the recent housing recovery, but they need to ensure transparency and the effectiveness of their investments to avoid a market collapse, according to analysts.

Risk is rising in the market, including because of banks' lending and guarantees.

Recognising that many banks are now ready to underwrite property projects, some developers try to con buyers by spreading rumours that their projects are guaranteed even when they are not.

Analysts have warned buyers not to be carried away by the exuberance in the market and to be careful because many housing projects stall or have their licences revoked due to various reasons, one of which is tardy construction progress.

According the HCMC Department of Construction, the city has to date had 41 per cent or 502 out of 1,219 residential projects that were forced to stop construction or unable to start construction. As many as 189 projects have investment licences revoked because of a lack of legal procedures.