Limiting loans for second and higher home purchases: Limiting speculation or needing to increase supply?

While some advocate limiting loans for second homes to cool down housing prices, many argue that it is necessary to increase the supply of affordable housing to meet real demand, instead of administrative intervention that could affect the market.

Many experts believe that there needs to be a solution to promote an increase in the supply of affordable housing to cool down housing prices, instead of intervening in the market with administrative measures - Photo: QUANG DINH

The draft resolution of the Government on controlling and curbing real estate prices has just been sent by the Ministry of Construction to 5 ministries and branches for comments before submitting it to the Government for promulgation.

Accordingly, the buyer of a second home can only borrow up to 50% of the value of the home purchase contract. In the case of buying a third home or more, the loan limit will be no more than 30% of the value of the home purchase contract, applicable from the effective date of the resolution until March 1, 2027.

In addition, the Ministry of Construction also proposed that the Government require localities to reserve at least 20% of housing projects for affordable housing and conduct transactions through state-managed trading floors.

Tuoi Tre Exchange, besides some supportive opinions, many experts and businesses said that this is an administrative intervention that can reduce market liquidity.

Mr. Nguyen Trung Tin (Chairman of TT Capital Board of Directors):

Need to promote legality and reduce costs

If credit is tightened for second and third home loans, this policy will reduce housing speculation, leading to a decrease in purchasing power. However, the solution to a "softer" price is to speed up legal procedures, help investors develop projects early, increase supply and reduce financial costs due to lengthy procedures.

If state agencies help businesses speed up legal progress, investors' financial costs will decrease, allowing them to sell apartments cheaper.

To get affordable housing, the investor himself controls costs well and foreign investors expect profits not too high, just over 10%, so the partner provides finance at a reasonable cost, helping to reduce housing prices.

In addition, there needs to be a better interest rate support policy for home buyers, in which those who buy low-cost and affordable homes need better interest rate support than those who buy high-end homes.

Dr. Le Xuan Nghia (member of the Prime Minister 's Policy Advisory Council):

Affordable housing supply must be increased.

The proposed policy of restricting home loans is an administrative measure that interferes with the operations of credit institutions. Commercial banks operating under the Law on Credit Institutions must comply with safety standards issued by the State Bank.

In other words, the State Bank has taken measures to limit real estate lending. Banks lending 1 dong in real estate must set aside 1.5 dong in reserves according to international practice.

Furthermore, controlling loans for second and third home purchases is also difficult, banks cannot control it. Real estate credit in Vietnam is about 4 million billion VND, accounting for 25% of total credit in the economy, still lower than China by about 30%, and European countries by about 40%.

In fact, the real estate market is closely linked to banks, most of the mortgaged assets at banks are real estate.

To control the real estate market, many countries use tax tools to control, while increasing the supply of affordable real estate to reduce housing prices. Accordingly, it is necessary to increase the proportion of affordable commercial housing in the total number of housing projects to over 20% as proposed, even accounting for the majority of housing projects licensed annually.

Mr. Tran Khanh Quang (General Director of Viet An Hoa Real Estate Investment Company):

Risk of "freezing" the real estate market

The Ministry of Construction's restrictions on lending to second and third home buyers are aimed at curbing real estate speculation, helping to curb housing prices, but could also cause negative consequences for the market's recovery.

Although real estate prices tend to increase, they are not uniform, but mainly concentrated in some specific segments and areas such as areas with new projects, auction areas, apartment segments and even "price manipulation". Meanwhile, many real estate investors are still facing difficulties, especially those who hold townhouses and land plots because the market has not yet recovered.

In fact, investors account for a very large proportion of new projects, about 60-70% or more, so tightening credit will immediately affect the liquidity of new projects, pulling down market sentiment. And when market sentiment goes down, investors will also participate less in the market, leading to the risk of a decrease in the supply of real housing products.

Therefore, the important issue is to create "real supply for real demand" and not "virtual supply for virtual demand" as at present. We must create a supply of social housing for low-income people and increase the supply of affordable housing for middle-income people, instead of intervening with administrative solutions.

Consider the rationality

Mr. Pham Duc Toan, general director of EZ Property, said that many investors use large financial leverage to invest in buying houses but then have to sell them at a loss of 30-40%, because house prices do not increase as expected while these investors do not have the money to pay interest and principal.

Therefore, limiting loans for second, third and more homes will reduce the number of people borrowing too much capital to buy a house, contributing to protecting investors from market risks. In fact, this solution only limits speculation to some extent because investors can completely circumvent the law to borrow capital to buy a house...

However, investors of many real estate projects in Ho Chi Minh City assess that the new policy is aimed at curbing housing prices, but when implemented, it may cause more difficulties for the real estate market and may not completely solve the problem.

An investor said that the regulation to reduce the loan ratio for a second home to 50% and a third home to 30% is unreasonable and the drafting agency did not provide any standards to determine this ratio and this will "lose the market nature".

According to this person, after the administrative boundary merger, many people, including a large number of civil servants, have to work in other localities. If they decide to buy a second apartment to live in, the loan limit will be reduced, causing difficulties for them.

Not to mention many cases for many reasons such as buying a house for relatives, children going to school... also need to borrow to buy a house.

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Source: https://tuoitre.vn/han-che-cho-vay-mua-nha-thu-2-tro-len-han-che-dau-co-hay-can-tang-cung-20251009080122273.htm