In addition to legal procedures, it is difficult for homebuyers to access capital because of high-interest rates, which is also a big challenge for many real estate businesses today.
Some banks have started offering preferential loans in packages of VND 120,000 billion. Specifically, the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), and Bank for Agriculture and Rural Development (Agribank) started lending to buy social housing, worker housing, renovation, and reconstruction, and old apartment building. Both banks spend about VND 30,000 billion for this program.
Vietcombank applies 3-year loans to investors and 5-year loans to homebuyers with an interest rate that is 1.5-2% lower than the average interest rate for medium and long-term loans of commercial banks state shares on the market in each period. Agribank applies a preferential interest rate until June 30, 2023, for investors at 8.7 %/year, and for home buyers at 8.2 %/year. From July 1, 2023, Agribank will announce the preferential loan interest rate every 6 months.
Photo: Internet
So far, there are still many opinions that the interest rate of 8.2%/year for homebuyers and 8.7%/year for businesses is still relatively high compared to the ability of businesses to pay people, but it was a great effort of the banks. The supply-demand mismatch is a huge problem right now, resulting in market demand. Demand is currently only 20-30% of the same period last year in most segments. Customers tend to wait for the market to "create a bottom", and lack the confidence to decide to go down. Not to mention, buyers lost confidence in some investors because they did not comply with the project's legal and progress commitments. At the same time, for people who want to buy a house, high-interest rates also reduce motivation.
Mr. Vo Hong Thang - Deputy Director of DKRA Vietnam Research & Development said that the real estate market is facing four challenges macro-politics; legal policy; capital market; real estate market difficulties. The bank's credit room has increased, but from a business perspective, the conditions for accessing capital are very difficult. In particular, lending interest rates, although tending to decrease, are still fluctuating 11-15% for medium-long-term loans.
The market's difficulties stem from supply, demand, price level, and psychology. Currently, the supply is very scarce in the market, only about 10% compared to the previous period, there are supply segments down to 79%, and the supply of resort real estate has almost frozen for many years. Particularly for Grade C apartments in Ho Chi Minh City, 3 years ago there was no commercial housing project costing 35 million VND/m2. The lowest price must be about 40 million VND/m2. It can be said that Grade C apartments in Ho Chi Minh City are "extinct", Mr. Thang said.
Nguyen Duy Phuong, Director of DGCapital, said that customers have accumulated part of the money to buy a house, and the rest plan to buy in installments but do not dare to borrow because the common interest rate at commercial banks is about 14 %/year. This level is too high so buyers hesitate. The large interest expense causes people to put off buying houses partly because their jobs are affected, their incomes are reduced when the economy is difficult, but mostly because the interest rates are beyond their ability to pay. Information about interest rate reduction in the past time actually only had a great effect on psychology, but it has not come to life. It is important that interest rates on personal loans must be reduced to improve output for the real estate market.
(Lao Dong)
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