The draft resolution on mechanisms to control and restrain real estate prices, announced by the Ministry of Construction for public feedback, has drawn attention with its proposal to cap loans at 50 percent for second-home purchases and 30 percent for third homes and beyond, aiming to curb speculation and restrain property prices.

Le Xuan Nghia, former Vice Chair of the National Financial Supervisory Commission, argued that the Ministry’s proposal, if approved, will interfere with the credit operations of commercial banks and will be inconsistent with the Law on Credit Institutions.

He stressed that controlling the real estate market by restricting home loans or limiting loans for second homes and beyond doesn’t come in line with international practices. Some countries regulate markets through personal income tax or capital gains tax, not credit measures, which are considered “taboo” in economic management.

“If implemented, who will come forward and verify whether a home is the first or second one? Authorities can’t do it, and commercial banks certainly don’t have this function,” Nghia said.

According to the expert, real estate credit in Vietnam accounts for about 23.68 percent of total outstanding loans, a modest figure. In China, it’s nearly 30 percent, while in some countries, property and housing loans exceed 40 percent.

“The problem doesn’t lie in prices but wealth disparity. The government needs measures to increase affordable housing supply, especially for low-income groups and social housing. It’s unrealistic to force prices from VND100 million/sqm down to VND20 million/sqm for the poor to afford,” Nghia said.

He explained that housing price growth depends on GDP growth, inflation, and urbanization. For example, in Vietnam, with 8 percent GDP growth, 3 percent inflation, and 1 percent urbanization, average real estate price growth per cycle is about 12 percent annually.

“Increasing the supply of affordable housing is the most effective solution. There’s no other way,” Nghia said.

Long-term stability needed

Dinh The Hien, a respected economist, warned that the proposal to reduce loan limits for second and third homes interferes with the banking capital market and monetary policy.

“If policies aren’t aligned with the overall strategy, they can cause adverse effects and create issues. The real estate market and financial-credit markets need long-term stability, not short-term solutions,” Hien said.

He argued that limiting loan amounts reduces market flexibility. In principle, banks determine loan limits based on products and borrowers’ repayment capacity.

“If banks loosen credit assessments, they will take responsibility for this. Instead of setting new regulations, it’d be better to strengthen supervision and ensure commercial banks’ compliance with State Bank regulations,” Hien said.

In large cities like HCMC or Hanoi, and in many countries, low-income workers primarily rent rather than buy homes. In smaller cities and other localities, housing issues are less acute. Thus, credit and housing policies need a holistic view, balancing social welfare and economic development, rather than focusing solely on lowering prices in major cities.

The expert also stressed the need to encourage financial investors to invest in the mid- and high-end real estate segments.

He said that buying homes for rental is positive, not harmful speculation, as rental costs are much lower than buying, offering more flexible housing options. Harmful speculation, however, involves buying, securing deposits, and reselling to inflate prices. 

Investors borrowing from banks and using rental income to repay loans can remain financially safe, contributing to the supply of quality apartments.

“The core issue lies in credit management. Banks must properly assess borrowers and refuse loans for overpriced or ‘paper’ projects, or to borrowers with weak repayment capacity. Instead of restricting loan access, we should standardize and tighten bank supervision, improve credit officer competency, and ensure proper procedures are followed,” he said.

Many experts recalled the 2022 lesson: when capital flows stalled, the market froze, dragging down multiple sectors. China is a prime example: tightening credit didn’t cool housing prices but pushed the economy into recession, with many businesses going bankrupt.

The fundamental solution to reduce housing prices is to significantly increase the supply of affordable products and resolve legal bottlenecks for stalled projects. When the market has ample goods, speculation will naturally lose ground. Restricting loans only freezes transactions without creating a single additional home for the public.

Hong Khanh