Vietnam's real estate market would not collapse even though it is now in a downturn and credit has been tightened, Deputy Construction Minister Nguyen Tran Nam said at press briefing Friday.
Nam said that many officials and the public have expressed concerns that the market could fall apart due to credit payment difficulties, but it was unlikely.
Market values of property products remain within safe levels and real estate companies are still capable of repaying bank loans, he said.
According to the Ministry of Construction, total real estate credit was recorded at around VND220 trillion (US$10.7 billion) at the end of May, down 7 percent from December 2010. Real estate loans now account for less than 7 percent of total outstanding loans in the country, the ministry said.
The State Bank of Vietnam has ordered local banks to cut lending for non-manufacturing purposes to 16 percent by the end of the year.
Nam said credit tightening has affected many sectors, including real estate. But he noted that the local real estate market is actually small because only 30 percent of properties in the country are available for trading.
The Ministry of Construction last week called for a ban on lending to luxury real estate projects, but said that the development of industrial projects, new offices and individual homes deserved to access bank loans.