HoREA urged that the State Bank of Vietnam to ask commercial banks to apply the resolution 01/2020 to benefit real estate businesses and homebuyers.
Chairman of the HCMC Real Estate Association Le Hoang Chau said that commercial banks have not considered realty estate companies and house buyers as entities of the State Bank of Vietnam’s resolution 01/2020.
Vietnam banks have seen the first quarter of 2020’s credit growth just 1.3 percent, lowest over the years because of Covid-19 impacts. Tightened credit has made real estate market more difficult.
HoREA said that real estate market faced difficulties from middle 2019 to early 2020. Noticeably, real estate businesses’ high credit balance plus Covid-19 impacts might in turn lead to insolvency.
Worse, property businesses have fallen into despair because of low demand for housing not mention to prediction of global and local economic crisis, potential buyers’ wait-and-see attitude and small investors’ sell-off.
As the pandemic and associated effect on the real estate market spreads, majority of people have spent on essential items rather than buying houses. HoREA said that property market in the first quarter went down while it was frozen in March and April.
Housing market has seen a 70 percent drop while turnover decreased by 80 percent leading to shortage of cash and liquidity crisis. Around 10 percent homebuyers faced financial difficulties because low income; therefore, they had to liquidate contracts. That would have been an added pressure to real estate businesses.
Mr. Chau proposed the State Bank of Vietnam should have a code of conduct and regulation for the real estate because presently, both commercial banks and real estate firms find it difficult with the Law on Credit Institutions. He suggested that the new code should include considerations of lower interest rate for housing loans.
Additionally, he proposed that real estate companies are allowed to take out new loans. Moreover, commercial banks should give full consideration to mortgage of firms which credit institutions have assessed to be able to repay loan.
Simultaneously, HoREA Chairman Chau said that commercial banks should consider to extend loan payment deadline and interest rate exemption for loan due day in 2020 for real estate companies and continue providing credit loan to homebuyers with lower interest rate and extend loan payment deadline.
Many people supported to cut interest rate for homebuyers who are mostly state-run employees and traders with stable monthly income. If commercial banks don’t lower interest rate for homebuyers who will sell off their apartments leading to many apartments being sold at low price as in 2012 badly impacting the market.
Real estate companies can manage their capital by issuing bonds. For instance, enterprises have issued bonds worth VND19,398 billion in first two months with average interest rate of 10.07 percent yearly and 60 percent of bonds have issued by real estate companies.
According to the Ministry of Construction, the country has 4,438 urban area projects and housing projects totaling around VND4.8 quadrillion and real estate inventory is at VND104 trillion. Luxury apartments, condotel and resettlement houses far from downtown have not yet found buyers.
