The construction procedures for social housing projects are intricate and time-consuming.

Acting on behalf of the Prime Minister, SBV Governor Nguyen Thi Hong conveyed in a report issued on October 8 and submitted to the National Assembly that, as of September 21, 2023, the total economic credit had exceeded VND12.62 quadrillion, up 5.91 percent compared to the end of 2022.

Notably, the Governor emphasized that credit for the real estate sector typically accounts for approximately 21 percent of the overall economy's credit, yet in the first seven months of 2023, real estate credit only increased by 4.99 percent.

During the first seven months of 2023, the outstanding balance for business real estate loans saw substantial growth at 18.95 percent, surpassing the annual growth rate for 2022, which stood at 10.73 percent, a notably high growth rate, more than four times the general credit growth rate.

However, consumer debt and loans for personal real estate use, which make up 65 percent of real estate credit, experienced a decrease of 1.36 percent. It marks the first year of declining trends in the past three years, indicating that credit capital is currently concentrated on the supply side of the market, while the credit demand for real estate purchases for consumer and personal use of the market is dwindling.

"The developments show that the measures taken to address recent market challenges are beginning to bear fruit. Legal issues related to real estate projects are being progressively resolved, leading to enhanced credit access for project investors," explained the Head of the SBV.

She added that in the current challenging landscape, the demand for housing is not customers' foremost priority. The product structure is suboptimal, characterized by an oversupply of high-end segments and a shortage of affordable housing that caters to the population's needs. Real estate projects grappling with legal issues find it challenging to meet credit criteria, which hinders their access to capital.

Governor Nguyen Thi Hong also highlighted that when it comes to the VND120 trillion credit package for social housing, workers' housing, and renovation and reconstruction projects of old apartment buildings, the construction procedures for social housing projects are intricate and time-consuming.

Many localities are still in the process of compiling the list of projects and investor demand, so they have not released the project list yet. Moreover, the incomes of homebuyers have declined due to difficult economic and business conditions.

Furthermore, the SBV Governor noted that the non-performing loan ratio in the real estate sector is increasing compared to the end of the previous year, with figures of 1.8 percent in July 2022 and 2.58 percent in July 2023.

Source: SGGP