According to a report that was released recently by the Vietnam Association of Realtors (VAR), an increases in real estate speculation across the country is causing concerns about a possible real estate bubble this year.
VAR notes that land prices in many places have risen by 10% in the last two months, though in some places they have even doubled or tripled. It says that in 2020, as a result of the global COVID-19 pandemic, many people stopped doing business or left their companies, and withdrew their bank deposits to invest in the property and stock markets.
Nguyen Chi Dung, Minister of Planning and Investment said at a recent government meeting that capital is flowing into potentially risky sectors instead of serving production and business expansion.
Nguyen said, "A reason for the surging inflows into the real estate and stock markets is the low deposit interest rates. Other reasons are poor land administration and planning, which have caused a land ‘fever’ with prices skyrocketing at the beginning of 2021 regardless of Covid-19.”
He added that, "It is necessary to pay close attention to the real estate and stock markets in order not to let market bubbles occur and affect the economy."
According to the National Economics University, growth in money supply and credit in 2020 approximated 2019, and that the government’s monetary policy and low interest rates were meant to aid the economy amid the COVID-19 pandemic, but the consequence was cash flowing into real estate and stock markets.
The NEU said that, "Skyrocketing stock and land prices in 2020 were signs of a market bubble. The ratio of money supply growth to GDP growth was nearly 200 percent. It means more money was entering the system than the real economy could absorb."
Dao Minh Tu, Deputy Governor of the State Bank of Vietnam (SBV), said that increasing land prices in many places have been caused by speculators and that in order to prevent speculation that the SBV is planning to tightening credit, especially for high-end property developments.