Interest rates are down but people still do not borrow money to buy real estate.

The real estate market is witnessing a paradox: although mortgage interest rates have decreased significantly, people are still hesitant to borrow money to buy a home and settle down.

Despite low interest rates, people are still hesitant to borrow large sums of money to buy houses and land due to persistently high housing prices - Photo: NGOC HIEN

Despite sharply falling interest rates, real estate buyers remain hesitant.

At the "Vietnam Real Estate - VRES 2024" conference organized by Batdongsan (a member of the PropertyGuru real estate technology group) in Ho Chi Minh City on December 5th, Dr. Can Van Luc (a member of the National Financial and Monetary Policy Advisory Council) pointed out the paradoxes of the real estate market.

Citing data from the State Bank of Vietnam, Mr. Luc stated that as of the end of September 2024, outstanding real estate loans reached 3.15 trillion VND (accounting for nearly 21% of the total outstanding loans in the economy ). Lending to the real estate sector increased by 9.15% (higher than the overall credit growth rate of 9%), with real estate business loans increasing by 16%, while loans in the housing sector only increased by 4.6%.

Assessing current interest rates at commercial banks, this expert believes that interest rates have decreased significantly compared to 2023, and overall, current interest rates are favorable for the real estate market.

However, according to Mr. Luc, despite low interest rates, people are still not borrowing much money to buy land or renovate their homes.

This economic expert believes the main reason is that real estate prices remain pegged at high levels, exceeding the financial capabilities of the majority of the population.

A survey by Tuoi Tre Online shows that interest rates for home loans at many banks currently range from 6-8% per year, significantly lower than the 10-15% per year last year. Many banks are also offering preferential loan packages with attractive interest rates such as 5-6% and fixed interest rates for 2 years.

Developers are also offering incentives such as flexible payment terms, grace periods for principal and interest payments, and reduced down payments for receiving the property…

However, this move does not seem to be enough to "save" the sluggish real estate market.

Interest rates have cooled, but house prices remain high.

Meanwhile, representatives from Batdongsan announced survey results showing that 56% of participants on the platform wanted to buy apartments priced under 2 billion VND, but the number of listings for apartments in this price range on the platform in 2024 only reached 17%. For apartments priced between 2 and 5 billion VND, there was 30% demand but the number of listings reached 50%.

For private homes, 69% of survey participants expressed a desire to buy properties priced between 2 and 5 billion VND, but the number of listings for private homes in that price range on this platform is very limited, at only 17%. This disparity means that 84% of buyers still have to borrow, with common loan amounts ranging from 30% to 50% of the property value.

Mr. Dinh Minh Tuan, the Southern regional director of Batdongsan , stated that in the two major cities of Hanoi and Ho Chi Minh City, the average asking price for real estate has increased significantly across most segments. Specifically, in November 2024, the average selling price of apartments in Hanoi reached 61 million VND/m², surpassing Ho Chi Minh City (55 million VND/m²).

The survey by this platform also showed that among the 12 projects currently on sale in Ho Chi Minh City, only 4 projects are priced below 60 million VND/m², while the rest are priced between 88 and 250 million VND/m².

Speaking to Tuoi Tre Online , Mr. Tran Manh Chi, Deputy General Director of Dong Tay Property Company, said that real estate prices remain the biggest obstacle for homebuyers. Although loan interest rates have decreased, with current property prices, the monthly payments remain a significant burden, especially for those with average incomes.

Dr. Can Van Luc believes that in order for people to increase investment in real estate, businesses need to strive to reduce or stabilize real estate prices in certain projects and segments through appropriate promotional methods, accepting smaller but sustainable profit margins.

Source: https://tuoitre.vn/lai-suat-giam-nhung-nguoi-dan-van-khong-vay-tien-mua-nha-dat-20241205181116868.htm