A real estate project in the capital city's western area. Property developers have invested in the high-end segment as incomes grow and growth remained stable, experts say.

The HCM City Real Estate Association recently warned about a surplus in the high-end segment while houses for low-income earners remained in severe shortage, triggering worries about possible instabilities in the market.

However, experts said that a property bubble was not in the making.

"It is right to raise early warnings," Tran Ngoc Quang, general director of the Viet Nam Real Estate Association said, adding that this would help property players plan appropriate strategies. He said that the imbalance was not too alarming, however.

Quang said that property developers invested in the high-end segment as economic development was stable coupled with improved incomes, resulting in rising demand in this segment.

Boston Consulting Group forecast that the number of residents with monthly incomes from US$714 per month in Viet Nam would increase to 33 million by 2020. Market research by Nielson also said that the middle-class the country would reach 44 million people by 2020 and 95 million by 2030.

According to Vu Cuong Quyet, general director of Green Land's branch in the north, supply of high-end apartments increased significantly during the past two years and sales were quite good.

The property market was different from 2009-12 when the market was frozen due to unprompted developments, experts said. Now, buyers were more cautious.

Quyet said that buyers were now mainly those who had real demand for houses as some were long-term investors, adding that he saw little speculation in this segment.

"We should evaluate the property market with a comprehensive view," economic expert Le Ba Chi Nhan said, adding that Viet Nam's property market was considered attractive in the region by many foreign investors and organisations.

Nhan said that demand for high-end housing would remain high as the country opened up the property market to foreigners.

Significant remittances into the property market would also support demand for the high-end segment, said Pham Thanh Hung, deputy chairman of CenGroup.

Tightening credit?

Still seeing signs of unbalanced developments, the State Bank of Viet Nam (SBV) started to enhance control over credits into property market in recent months, with credit growth in this sector in the first eight months of this year lower than the credit growth of the economy for the first time.

SBV statistics showed that as of the end of August, credit growth in the property sector was 6.72 per cent, equivalent to half of the rate in the same period last year. In comparision, credit growth of the whole economy was at nearly 10 per cent in the eight-month period.

Experts said that tightening credit in the property sector needed to be given careful consideration as capital for property development relied 70 per cent on loans.

Economic expert Le Xuan Nghia said that credit policies should be chosen based on careful market analysis in both the medium and long term. Although the property market was in recovery, it needed time to gain firm ground, he said.

The recovery of the property market was also important to the handling of bad debts and economic growth, Nghia said.

He said close watch on property lending was necessary to prevent a bubble from occurring but at the moment, credit should not be tightened.

"Not until 2021-23 will a property bubble occur," Nghia predicted.

Former Governor of the central bank Cao Sy Kiem said that policies should be flexible and ensure harmonious development of the banking and property sectors. 

VNS