Though there is no sign yet of the price "fever" that periodically marks the Vietnamese property market or a bubble, the market remains a hot topic for analysts and the media.

A corner of the social housing project in Dang Xa, Gia Lam district, Hanoi.

In discussions, most experts say the market has performed impressively in recent months, with figures showing that a strong recovery has set in after a long freeze. But they also warn there are distinct signs of risk, especially bank credit-related.

The Government seems to be in concurrence. In its Decision No.01/NQ-CP it seeks to severely curtail lending to high-risk sectors, in which it has included property.

State Bank of Vietnam Deputy Governor Nguyen Phuoc Thanh told a recent meeting with HCM City authorities that the central bank would restrict property-related loans this year, revealing that though a majority of loans went into funding production and business activities last year, many banks had lent too much to the real estate sector.

The housing market started recovering in late 2014. Last year the recovery was clearly reflected in the rising number of successful transactions and new projects, plunging inventories and easier credit.

According to a report by property services provider CB Richard Ellis (CBRE) Vietnam last year, in Hanoi, housing transactions hit a record 21,100, surpassing the 2009 number.

High-end apartments accounted for 28 percent compared to 21 percent in 2009.

The market also witnessed a rise in the number of long-delayed projects that was revived.

Last year also saw a firm recovery in HCM City with numerous launches, positive sales volumes and higher prices, especially for mid- to high-end properties.

More than 41,900 units in 78 apartment projects were launched, mostly in the east (47 percent) and south (27 percent) of the city, an increase of 122 percent over the previous year.

Overall, market sentiments remained positive through the year as 2015 ended with record annual sales – an estimated 36,160 units or up 98 percent year-on-year.

The strong recovery is attributed to several factors, including the 0.63 percent inflation last year, the lowest rate since 2001 and way below the average of 5 percent in recent years.

The low inflation supported a growth in consumption and investment, including in housing, which was also helped by the low mortgage rates.

But the decisive factor was probably banks' huge lending to both property developers and buyers.

In reality, the majority of property developers lack funds while the sector requires large medium- and long-term funds and there are few sources of funding for real estate firms.

Consequently, they rely completely on three main sources – owners' equity, buyers' money, and bank loans.

Besides, with most middle-class individual buyers dependent on bank loans to buy a house, lending by banks is always the key to the development of the property market.

As a result, credit to the housing sector grew 14.59 percent last year and 80 percent from three years ago to 360 trillion VND, according to the State Bank of Vietnam.

In fact, of the total outstanding credit, loans for property development and mortgages account for 20 percent, and many banks are still expanding lending programmes targeted at real estate.

Indeed, overall credit growth reached 18 percent last year, higher than the rate in 2011-14.

The experts express fears that the rapid growth of the housing market and credit poses threats of a bubble and a rise in bad debts just like a few years ago. While the real estate market recovered rather strongly last year and might continue to grow this year, the recovery is not really on a firm footing yet, they warn.

They also warn that the luxury apartment segment is experiencing oversupply.

But the supply of social housing and small and medium-sized apartments, which is where the real demand is, is limited, they say.

In HCM City, for instance, dozens of high-end apartment projects are being marketed despite the modest demand. On the other hand, only 6,000 apartments are available for low-income earners.

It seems that developers are focusing on high-end products with an eye on the expected foreign investment wave following the country's accession to the TPP while ignoring low-income earners, who have huge demand for housing.

Many believe the TPP is not a magic wand that will change the market immediately.

Another big challenge facing the market is credit-related.

According to the HCM City Real Estate Association, secondary market investors now account for 15 percent, up three-fold from 2014. They mainly focus on the high-end segment, buying in and selling quickly to profit from price differences.

The experts warn if the speculation is not checked, instability and a possible bubble loom.

But things are likely to remain stable this year if 50 percent of the money flowing into the secondary market comes from speculators' own pocket, they say.

But 70-80 percent of the money comes from banks and other sources of credit, often at very high interest rates, and this poses a big threat of bad debts.

Faced with this situation, the central bank has announced it will closely monitor property and long-term loans this year to safeguard the quality of credit growth.

The experts concur that it is important to tighten oversight to prevent overheating, which will cause a property bubble, especially by the banking sector over lending to the property sector.

VNA