In an effort to "warm up" the real estate market, a series of packages have been introduced from the government to banks. Recently, a new credit package is mentioned by many people, accordingly, subjects of this new credit package will be public officials, armed forces who may borrow up to VND2 billion with the estimated maximum time of 10 years with interest rates ranging from 6 -7 percent / year. The question is whether the real estate market may “take off” with the launching of many credit packages?
In fact, the real estate market still has quite a lot of inventory, especially in the medium and high-end segments. Dr Pham Sy Liem, Former Deputy Minister of Construction, said that the support packages with loose conditions will help relieve stagnation, contributing to promote this segment. But, he also proposed to change the implementation method because "this is the solution to promote market to solve problems by itself".
However, there are also many objections. Mr Nguyen Van Duc, Director of Dat Lanh Real Estate Company, said that over time, the real estate market in Ho Chi Minh City was still active due to the dynamic of enterprises but not the VND30 trillion package. "If a new credit package was deployed, it would be a mistake. Instead of launching a new package, we should focus on the VND30 trillion package which had good targets but existed some problems in procedures and performance measures.
In terms of the feasibility of this new credit package, Mr Le Hoang Chau, Chairman of Real Estate Association of Ho Chi Minh City said that, it is not feasible due to the following reasons.
Firstly, the interest rate applied for 10 years from 6 to 7.5 percent must be a fixed interest rate. Therefore, banks will certainly not dare to lend because they will be at the risk of losses if they cannot control inflation with that rate of interest during 10 years. Currently, many banks and credit institutions dare not lend with a fixed interest rate.
Secondly, if applicable a floating interest rate, or a fixed interest rate only in the first 1 or 2 weeks, then consumers do not want to borrow due to risks. The solution to this problem is to apply the lending rate by the average interbank interest rate plus or minus 1.5 percent. At that time, both consumers and banks can benefit.
Therefore, Mr Le Hoang Chau stressed that there needed to accelerate the disbursement of VND30 trillion credit package according to Resolution 61 of the government to stabilise the society and solve difficulties in the real estate market such as inventory and bad debts.
Meanwhile, Mr Tran Nhu Trung, Deputy General Director of Tan Hoang Minh Group recommended “fixing” the currently poor macroeconomy. The real estate market may warm up as income rises. In the real estate market, we must overcome particular obstacles in each project. Social housing projects should be supported under the total payment loans, for example, loans for apartments from 750 million - 1.05 billion. The interest rate for commercial flats ranging around VND5 billion should be kept unchanged, according to the market. We need to apply market instruments.
In the context of the real estate market experiencing so many difficulties in terms of output, the introduction of support measures is essential. But, before policies are issued, decision makers need to study the reality and practical lessons about the effectiveness of the support packages which were deployed to avoid wasting time and money.
Mr Nguyen Viet Hai, Director of VIC Real Estate Trading Floor
If there is a new aid package, in my opinion, we must first assess the supply of products on the market. The credit support to customers is a good thing, because all people want to get a loan to buy a house with low interest rates, but we must pay attention to the support time, support subjects and procedures to stimulate the market. It is not reasonable to introduce policies, but, with much delay, because it can affect customers’ sentiment as well as hinder investors from making sales policies.
Dr Nguyen Tri Hieu, Financial Expert
Obstacles of VND30 trillion credit package is its credit structure inappropriate to the financial capacity of Vietnam. That the 15-year loan term as at present is too short for low-income borrowers do not create favourable conditions for the borrowers in paying back their debts, not to mention the poor availability of the package. With the new aid package, it is calculated that the borrowers must pay more than VND20 million in total, a large amount of money, and that amount of money basically only accounts for approximately 50 percent of the total household income. Thus, to be effective, the credit structure must be very long, at least 20 years, or even 30 years.
Mr Le Quoc Chinh, Business Development Director of Daewoo Cleve Project
If the new credit support package aimed at civil servants with quite high income level, I think there are some challenges. In the long term, to improve the situation of the property market, the government should facilitate in terms of policies such as administration procedures and clearance for businesses in the project. Vietnam's real estate market is an emerging market which is still potential for both buyers and sellers. Currently, the market is off track due to the market crisis so the government needs to have appropriate policies to adjust early. Promulgating inappropriate policies will be a waste of time improving the economy.
Luong Tuan
Vietnamese
