Although looser credit policies to assist developers of low-cost housing to access bank loans were greeted enthusiastically this week by the real estate industry, experts doubted the looser policy would give much of a boost to the frozen real estate market.
The Hoa Bien Urban Area in the southern city of Rach Gia. Experts doubt that looser credit policies will significantly boost the frozen real estate market. — VNA/VNS Photo Huy Hung
HA NOI —
The State Bank of Viet Nam issued Document No 8844/NHNN-CSTT last Monday, easing credit restrictions on non-productive industries to allow commercial banks to grant financing for social housing projects.
Under the document, projects to build apartments for low-income workers at industrial parks and economic and processing zones, as well as housing projects that would be completed and available for occupancy before the beginning of next year, would be eligible for credit. Mortgage loans for home buyers would also be excluded from the credit restriction.
This was a correct decision, said the former director of the HCM City Economic Research Institute, Tran Du Lich, noting that the real estate market was interrelated with a number of production sectors, including building materials manufacturers. Looser credit for housing construction would help boost these industries, Lich said.
The new policy would have a positive, short-term impact on demand for housing, helping low-income buyers get into new properties more quickly, said Viet Nam Real Estate Association general secretary Phan Thanh Mai.
However, Mai said the market would continue to need more capital for medium- and long-term development, and urged the introduction of new tools to finance development, including house savings funds and real estate investment trusts.
Navigat Real Estate Consulting Co director Dang Van Quang also said the new policy was just "spirit medicine" for the local property market, a small boost for the optimism of investors that was unlikely to have a significant impact on the market.
Quang told the online newspaper Vnexpress that the new policy would benefit few actual construction projects, nor would it help low-income workers obtain loans to finance home purchases since commercial banks still decided whether to grant loans based on the earnings of the borrower.
Workers with wages of just VND4-8 million per month would be unlikely to qualify for loans of hundreds of millions of dong for apartments with prices of VND10-12 million per square metre, Quang said.
High interest rates of 20-25 per cent would also keep investors and home buyers from borrowing to buy property or finance construction of projects, he said.
Dat Lanh Real Estate Co deputy director Nguyen Van Duc also noted that housing projects to be completed and available for occupancy before the beginning of next year were not in need of capital, as projects generally needed to arrange financing by the time they were 50-70 per cent completed. — VNS