Funds from banks for the property sector, especially for project development, have remained locked after over a month since the central bank loosened its grip on capital for the industry, industry insiders said.
Tran Minh Hoang, board chair of Vinaland, said lending conditions have eased substantially, but the market has reacted slowly.
Hoang said that the sentiment remained low on the market while panic still haunted many home buyers who fear that even if they pour money into ongoing projects, property developers could hardly complete their schemes on schedule.
“Apartment prices have tumbled, but (houses are) not cheap enough. The crucial point now is how to win back home buyers’ confidence,” Hoang explained.
Since lending conditions were eased on April 11 following a decision of the central bank, few banks have channeled funds into property developers. However, many banks have launched programmes to attract genuine home buyers at preferential lending rates.
HSBC Vietnam is perhaps the lender with the biggest number of home buyers seeking loans after the bank launched a great promotion, charging a lending rate of only 15.5 percent a year for long-term loans plus a zero interest rate for the first month. The bank said that declining property prices coupled with lower lending rate would be a good chance for home seekers.
A credit officer at Asia Commercial Bank (ACB) observed that credits for home buyers have increased slightly in recent weeks. The bank has set aside VND1 trillion to lend home buyers, offering collateral loans at an interest rate of 18-19 percent a year.
Ly Xuan Hai, general director of ACB, said the VND1 trillion credit line is launched to capitalise on the housing demand poised to go strong once the property price goes down and loans are cheaper. However, Hai also admitted that the lending rate remains high for home seekers.
At Vietnam International Bank (VIB), home buyers have come knocking, but the number is still small, said an executive. However, there are almost no borrowers who are project developers, since there are no signs the frozen market is thawing, the source said.
Tran Anh Tuan, general director of Nam A Bank, said the wait-and-see attitude still prevails. Home buyers are waiting for the interest rate to go down further, waiting to see property prices to ease, and waiting to see warming-up signs on the property market, he said.
Winning back confidence
Le Hoang Chau, chair of the HCM City Real Estate Association (HoREA), commented that the crisis on the local property market relates largely to the confidence.
While people in need of housing products are waiting for prices to go down further, developers are selling products at break-even point or even at a loss, Chau said. The solution now is how to build up confidence, how developers could provider buyers suitable products at reasonable prices, he said.
Given the dreary property market, some enterprises have initiated new solutions.
Bank for Investment and Development of Vietnam (BIDV), for example, has recently announced a connectivity programme linking up key stakeholders in the property market, namely the project developer, the contractor, the supplier of building materials, and the bank. The cooperation among these stakeholders will help project developers have funds to complete projects, while suppliers of building materials can sell their products.
However, Chau of HoREA observed that such collaboration initiated by BIDV only helps with the market input, while the big problem now is how to find outlets for the market as property developers are facing mounting inventories.
Chau, therefore, suggested that there is collaboration among other stakeholders to find the way out for the market. He said the collaboration should include the investor, the broker, the consumer, and finally the bank.