Credit package brings positive impact, but yet a big help

Credit package brings positive impact, but yet a big help

The VND30-trillion credit package aimed at helping homebuyers and property developers was launched last Saturday. While many realty developers praise the move as positive to stir up the long-frozen market, others did not expect it to solve the problems of the property market.

Little motivation

Trinh Van Quyet, chairman of FLC Group, said the credit package had a positive impact on the property market, easing the financial burden on those in need of housing and providing realty firms with a motivation to return to the market.

“This preferential package will change the home buying habits of Vietnamese people. In the past, they only purchased homes after saving enough money or borrowing from acquaintances, but now they can take out bank loans at low interest rates with a long term to pay installments for homes,” he said.

Sharing this view, Nguyen Hoang Nam, director of the property trading floor INFO under Ocean Group, said the VND30-trillion package would create a strong impact on first-time homebuyers.

Just one year ago, buying a house on an installment plan was still a distant dream, even to those with above-average incomes. Now, with loans at an interest rate of 6% per annum and a term of up to 10 years, home purchase is no longer a great burden.

According to INFO, about 90% of property transactions have values ranging from VND1 billion to VND1.5 billion, so the condo projects with prices less than VND15 million per square meter will be very attractive to end-users.

Pham Si Liem, chairman of the Vietnam Construction Society, remarked the credit package would not only help low-income people realize their housing dream, but also stimulate the recovery of the property market.

“As one of the pioneers in developing low-cost homes, we’re very glad of this supporting policy from the Government. Since low-cost housing is a part of the property market, supports will help address the housing needs of workers and indirectly prop up the market,” said Tran Xuan Hung, deputy director of Viglacera Infrastructure Investment Development Company.

Problems remain unsolved

However, some said that the VND30-trillion package could not rescue the property market.

Quyet of FLC Group stressed the State should not be the only one in charge of reviving the property market. In the current tough times, the preferential credit package should be recognized as an attempt by the Government to offer low-income people to acquire condos, he said.

Meanwhile, Liem said this package alone would hardly solve the current problems of the real estate market. The package is aimed at assisting low-income earners in buying homes, but he wondered if there were homes meeting their demand.

Currently, supply of budget condos is limited. Therefore, many property developers will have to convert their products to low-cost ones, and they need funds for this job.

“Besides, property project owners have previously raised funds from homebuyers in the form of capital contribution. Now, they want to turn their products into affordable ones, but many of those who have made capital contributions do not want to buy this kind of housing, forcing the project owners to return their money.”

“Therefore, it is necessary that one third of this credit package is given to property developers to convert their projects,” said Liem.

“We should not misunderstand and pose a question why realty firms receive help instead of low-income earners. Giving loans to project owners will also make homes available for low-income people,” he underscored.

For those in need of funds to build low-cost condos covering less than 70 square meters priced below VND15 million per square meter, just 30% of the package is very meaningful, he said.

Quyet said there should be more banks to allocate loans instead of only five. Besides, a mechanism for supervision and heavy sanctions should be introduced to prevent enterprises from borrowing preferential loans for other purposes, or re-lending at higher interest rates to gain profits.

“There must be an effective mechanism for disbursing loans. The central bank should set an extra requirement that banks wanting to participate in allocation of this package must commit to offer a loan repayment period of 15-25 years,” he said.

“There should also be a grace period of 2-3 years from the date of loan contract signing,” he suggested.

vietnamnet