Categorized | International

Vietnamese Economy Faces Potential Struggles due to Real Estate Inflation

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The global economy continues to be at the mercy of the real estate market. Analysts are now eyeing Vietnam’s real estate market as being one that could cripple it’s national economy if actions are not taken to curb surging inflation in property prices.

Vietnam’s real estate market has grown as much as thirty-five percent in the last year, and there is little indication that the government has begun to establish a strategic plan to control the excessive growth. There is worried that such growth is not sustainable, and will likely lead to a crippling crash if not addressed soon enough.

Ireland serves as a prime example of how such a situation can excessively damage a nation’s economy. It was in 2008 that Ireland saw its property market crash, causing the country to face insurmountable economic struggles from which it has yet to recover.

One of the biggest fears regarding the surging housing market is that the banks are forced to give out increased loan amounts to match increased property prices. With such demand, it is likely that bad loans will be approved, which could lead to massive defaults. The outstanding balance within the real estate sector in Vietnam has already reached nearly twelve billion dollars. Without some kind of measure to evaluate the debt, and the banks issuing the debt, it is likely that there will be a major economic crisis should a percentage of the loans default.

Many of those nations that are reaping the consequences of failing to take action are now warning Vietnamese officials to re-evaluate the real estate market, and to slow it down now or potentially face a hazardous economic situation in the future

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About Nancy Raven

Nancy is the main writer for the International section of the website. Sometimes she also helps Drew out on the Finance/Mortgage section as well.

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