House prices and bank loans: Some theoretical issues and current situation in Vietnam

Abstract

Vietnam has experienced a boom in the housing market on a large and prolonged scale, especially since the late 1990s. The rapid growth of the market, coupled with soaring real estate prices, has stimulated an increasing demand for loans. In this context, home loans have become the largest component in the credit portfolio of Vietnamese banks for many years. Conversely, the significant increase in real estate credit has also contributed substantially to the housing price booms. The interaction between housing prices and the credit flow from banks is therefore two-way. Thus, the objective of this article is to build a theoretical foundation on the relationship between housing prices and bank lending, while analyzing the current situation of housing prices and bank lending in the real estate sector in Vietnam in recent times. Based on this analysis, the author will propose some solutions and recommendations to enhance the regulatory role of the Government over bank credit and housing prices to ensure the stability of the financial system.

Keywords: Housing price; bank lending; and real estate loans.