"Searching desperately" for a house under 2 billion VND.

The Ho Chi Minh City Real Estate Association (HoREA) has just proposed to the Prime Minister and the State Bank of Vietnam to allow buyers of commercial housing priced under 1.8 or 2 billion VND/unit to receive a 2% annual interest rate subsidy on bank loans from now until the end of 2023 in order to support the real estate market and consumers with housing needs.

I own a house worth 2 billion VND but can't get a loan.

HoREA's proposal stems from the fact that the current market has virtually no social housing units. While many developers of commercial housing projects are implementing policies to reduce selling prices, offering deep discounts of around 50%, leading to apartment prices in some projects reaching approximately 2 billion VND per unit, buyers of commercial housing are still unable to obtain loans at reasonable interest rates.

In Prime Minister's Directive No. 1164/CĐ-TTg dated December 14, 2022, which directed the timely provision of credit capital to the economy ; and the rapid, focused, and targeted lending and disbursement to eligible businesses and real estate projects… there was still no policy to support a 2% annual reduction in credit interest rates or provide loans at reasonable commercial interest rates for buyers of commercial housing priced under 1.8 or 2 billion VND/unit.

The real estate market in Ho Chi Minh City currently has very few apartments priced under 2 billion VND. (Photo: TAN THANH)

Furthermore, because the 40,000 billion VND credit package, which aims to reduce loan interest rates by 2% per year according to Decree 31/2022/ND-CP, had only disbursed approximately 21,000 billion VND by the end of October 2022, reaching 52.5%, the failure to fully utilize this support would result in a waste of resources from the state budget.

However, according to a survey by a reporter from Nguoi Lao Dong Newspaper, there are very few houses priced under 2 billion VND in Ho Chi Minh City. Mr. Hoa, a real estate agent in Thu Duc City, said he is currently assisting several clients in selling small apartments priced under 2 billion VND in the Vinhomes Grand Park area (Thu Duc City). Each apartment is approximately 30-40 m2 with only one bedroom and no living room, priced from 1.6 to 1.8 billion VND per unit.

However, these apartments are very rare and, although handed over by the developer, are often unfurnished and lack many amenities, requiring buyers to furnish them themselves before moving in. "I advertised 5-6 apartments, and 4 have already been sold. These apartments still have existing bank loans under the old contracts, which is why the buyers agreed to purchase them. The remaining apartments are smaller and don't have existing loans, making them difficult to sell," Mr. Hoa explained.

According to Mr. Hoa, there are only a few apartments in this area with such affordable prices; many others have an area of ​​over 60 m2, with 2 bedrooms, and the lowest selling price is 2.5-2.8 billion VND per unit.

Meanwhile, apartments priced under 2 billion VND are currently mostly social housing units located far from the city center, with small areas, and have already been sold by developers. Buyers are reselling them, with no new units available. In addition, there are commercial apartments that were handed over more than 10 years ago, also located far from the city center (over 12 km). However, these types of apartments do not qualify for bank loans, or if they do, the loan-to-value ratio is very low.

The general director of a real estate company in Ho Chi Minh City affirmed that currently, all new projects entering the market are in the high-end segment, with very few units priced below 2 billion VND. Most units priced below 2 billion VND were sold in 2018-2019 and should have been handed over in 2021-2022 but were held up due to legal issues or financial difficulties on the part of the developer. While previous buyers could transfer their contracts, new customers are hesitant because the projects are not yet completed, and new bank loan conditions may not be met…

It's very difficult to get a loan.

Mr. Hoang Lai Do The Nguyen, a person with many years of experience in real estate marketing, believes that if the proposal to reduce interest rates by 2% for home loans under 2 billion VND/unit is approved, it will only have a positive psychological impact, slightly boosting market enthusiasm. However, considering the number of eligible properties and buyers eligible for loans, it is very difficult to realize this because houses under 2 billion VND have almost "disappeared" from the market.

A credit officer at a commercial bank in Ho Chi Minh City said that during this period, banks do not have the capital to provide long-term loans to individual customers, especially for home purchases. Even loyal customers are only eligible for short-term loans, typically for one year, after which they may be able to renew depending on the bank's available funds.

However, the loan eligibility criteria are very strict, with some banks requiring borrowers to purchase life insurance… In addition, borrowers must have a net income of 14-15 million VND/month received through their bank account; those who are self-employed or have unstable incomes are not eligible for loans…

"Furthermore, the collateral must be a fully legally owned apartment. The bank then values ​​it at approximately 70% of the market price and only lends a maximum of 60%-70% of that price. As for detached houses, the alley must be wide, and the area must meet regulations such as a house width of over 3 meters, a total area of ​​over 25 square meters, and an alley in front of the house over 3 meters wide… However, there are no such houses priced below 2 billion VND, and if there are, they are located very far away..." - this specialist explained.

Based on the above situation, Mr. Le Hoang Chau, Chairman of HoREA, believes that in unusual circumstances, the state needs to issue unusual solutions to promptly and effectively address difficulties in the real estate market. Clause 5, Article 7 of the 2014 Law on Real Estate Business also stipulates: "The State shall have mechanisms and policies to stabilize the real estate market when there are fluctuations, ensuring benefits for investors and customers." Therefore, Mr. Chau suggested that the State Bank of Vietnam should consider not maintaining the current credit standards in the current unusual situation, but should loosen them "a little" to support businesses and homebuyers.

Source: https://nld.com.vn/kinh-te/do-mat-tim-nha-duoi-2-ti-dong-20230102212650731.htm