Vietnam real estate market may recover slowly, experts say
02-05-2012
 The State Bank of Vietnam last week announced it has loosened restrictions on home loans |
Le Hung, general director of Hoang Anh Housing Development, a subsidiary of Vietnam’s top real estate company Hoang Anh Gia Lai, said his company had planned to launch many new projects but was discouraged by the market slowdown. Market liquidity was weak and homebuyers could not access bank loans, he said.
Now that the credit squeeze on real estate has been eased, his company will resume its plans, Hung said. Lower interest rates will benefit both homebuyers and developers, he added.
Vietnam’s property market is in a downturn that began two years ago, with home prices falling by an average of 30-40 percent since a peak in 2007-2008.
In an attempt to boost the real estate sector and related industries including steel and cement, the State Bank of Vietnam last week announced it has loosened restrictions on home loans
State Bank of Vietnam Governor Nguyen Van Binh said real estate loans were restricted last year in an attempt to control inflation. “Now that liquidity has improved and inflation has eased, the restrictions need to be lifted gradually,” Binh said.
Hoang Anh Tuan, general director of Tac Dat Tac Vang, a Ho Chi Minh City-based real estate company, said public savings had increased of late. Since deposit interest rates have been high, many people just put their money into banks instead of investing it.
With the economy showing signs of recovery and the financial sector improving, investors may return to the property market, Tuan said.
The central bank last week lowered the dong deposit cap for terms of one month and above to 12 percent from 13 percent.
Tuan said the recovery of the property market will depend on how easy it is for homebuyers to take out loans from banks. As the central bank continued to cap real estate credit at 16 percent of total loans, money supply for the sector may be limited, he said.
“If businesses and buyers can have access to credit at low rates, the real estate market will pick up quickly,” Tuan said.
Hung of Hoang Anh Housing Development said it could take up to six months for interest rates to fall to a more reasonable level because banks still have funds that they attracted earlier at high interest rates.
“Only when input costs for banks fall can we expect low interest rates,” he said.
