Massive sale of mortgaged real assets will not occur

Worries have been raised that commercial banks may sell the real assets mortgaged for 1-year loans which mature in August 2008. However, there has been no sign that a massive sale of mortgaged assets will occur.

Experts believe that banks will not sell mortgaged assets as the most difficult period for them is over. Banks’ US$ capital is in excess, while mobilised VND capital has helped improve their liquidity.

They said that the pressure on banks to sell mortgaged assets is now not as great as it was. However, this will not help the real estate market recover immediately – the market will still face a lot of difficulties before it turns around.

Real estate credit has been decreasing sharply in the last four months, especially in Hanoi and HCM City.

In HCM City, by early July, outstanding loans had decreased by VND3,700bil compared to the end of the first quarter of 2008. Loans to fund real estate projects have also decreased sharply in Hanoi, with some banks having 50% less.

While banks have nearly stopped real estate loaning, they are also trying to collect debts from borrowers. Banks are trying to reduce outstanding loans on real estate deals in order to avoid risks.

While experts affirm that a massive sale of mortgaged real estate property will not occur, bankers have confirmed this, saying that they will not push their clients against the wall.

In fact, neither bankers, state management agencies nor clients want the real estate market to continue declining.

Nevertheless, experts have warned that real estate developers will still find it difficult to access bank loans until mid 2009.

Only in the future, when interest rates become more stable, and banks can mobilise longer-term capital, and monetary policies are loosened, will capital flow to the real estate market increase.

And this will happen in the second half of 2009, experts say.

In fact, the real estate market has become warmer with the demand increasing from the segment of houses for low-income earners. Many real estate firms have shifted to invest in low-cost apartments and houses, especially ones priced at VND500mil-less than VND1bil, which allow them to get back money quickly.

(Source: Lao dong)