Credit growth in construction and property has slowed, easing concerns about an overheating market, National Bank of Cambodia said

Cambodia Compass report, 14th June - As the construction boom slowed due to the pandemic, loans to building and real estate activities grew at a slower rate of only 23% in 2020. According to the National Bank of Cambodia's (NBC) Financial Stability Review 2020, issued on May 31, this slowing of credit growth has alleviated some concerns about an overheating property market.

Construction loan growth remained robust in 2020, with an annual growth rate of 26.3 percent, down slightly from 29.1 percent in 2019.

Meanwhile, the rate of increase of outstanding loans for real estate activities has slowed to only 20.1 percent each year, down from 40.3 percent in 2019. This is owing to the slow pace at which real estate projects and sales are progressing.

According to NBC, the slowdown helped to alleviate the hot real estate market, which has long been a source of concern for international monetary agencies like the ADB, IMF, and World Bank.

The construction and property industry absorbed a significant proportion of total credit as a percentage of total credit. Credits allocated to construction, property, and mortgages will account for around 32% of total credits in 2020. Construction, property, and mortgages have percentages of 10.2 percent, 8.7 percent, and 13.7 percent, respectively.

Source: Cambodia Compass comprehensive arrangement

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