The State Bank of Vietnam (SBV) has set limits for banks’ loans to be disbursed for real estate investments. The aim is to restrict the funding of high-end real estate projects.

However, experts and realtors have called for SBV to rethink the plan, saying that the limitations would impact the real estate market, which is cooling down.

Nguyen Quoc Hiep, chair of GP Invest, said the property market in 2019 would meet with difficulties caused by new policies, including the request to re-examine real estate projects.

Once the real estate market slows down, industries such as steel, cement manufacturing and interior decoration will bear the influence, which will affect Vietnam’s GDP.

HIep suggested carrying out research on how the policy would affect the macro economy, warning that some cities and provinces are likely to raise the land price levels in their localities.

An analyst pointed out another risk: the decrease in supply would increase the land price and the market may see a ‘bubble’ again.

“An overly hot market would lead to a bubble, while overly cold market will not support GDP,” he said.

The HCMC Real Estate Association also pointed out challenges for the market. A number of real estate firms are at risk of going bankrupt because of unstable and unpredictable policies.

Meanwhile, the real estate market is shrinking because of the decrease in number of projects. The short supply and high demand would push the prices up.

According to the association, the HCMC real estate market has been declining since March 2017. The market scale decreased by 34 percent in 2018 compared with 2017. In Q1 2019, the number of projects approved by the city construction department decreased by 67 percent.

Meanwhile, according to Savills, the number of apartments in supply is 57 percent lower than the same period last year.

For that reason, the real estate association believes the tightening of real estate credit would create a chaotic market.

Nguyen Van Dinh, deputy secretary general of the Vietnam Real Estate Association, said encouraging the development of lower-end market segments is necessary. However, to do this, it won’t be necessary to ‘sacrifice’ the high-end segment which now attracts foreigners who come to Vietnam to live and work.

Dinh went on to say that there is no sign of abnormal price increases in the real estate market in general and the high-end segment in particular, so there is no need to apply measures to restrict credit.

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H. Dung