Sky-high apartment prices in Hanoi, how to take advantage of 'cheap money' opportunity, Vietnamese people can directly buy houses and land

The State Bank informs about lending for future housing purchases, experts advise on how to take advantage of the "cheap money" opportunity in 2024, Vietnamese people can directly buy houses and land... are the latest real estate news.

Phối cảnh quy hoạch Khu đô thị Green Garden. (Nguồn: Green Garden)

Real estate is still one of the most important markets that people are interested in investing in at the present time. In the photo: Perspective of Green Garden Urban Area planning. (Source: Green Garden)

No ban on lending to buy future housing

In response to concerns about a ban on loans for future housing purchases, a representative of the State Bank said that Circular 22/2023/TT-NHNN amending Circular 41/2016/TT-NHNN, effective from July 1, 2024, regulating capital adequacy ratios for banks and foreign bank branches, does not restrict the right to purchase future housing.

Specifically, Circular 22 does not change regulations on lending for this type of housing, nor does it limit the rights of organizations and individuals to buy future housing.

According to current regulations, loans to purchase and implement real estate projects and secured by the real estate itself, the project formed from the loan, are defined as real estate-secured loans. Loans defined as mortgage loans must meet the following conditions: the source of debt repayment is not from the rental income of the house formed from the loan, the house has been completed for handover according to the sales contract, the house formed from the loan must be independently valued...

Accordingly, loans for real estate and housing purchases and mortgages using future assets apply a risk coefficient from 30% to 120% depending on the loan-to-value ratio (LTV), which is calculated as the ratio of the loan balance to the value of the collateral.

According to the representative of the State Bank, the new Circular reduces the risk coefficient when lending for the purpose of buying social housing compared to loans for buying real estate and other housing. Accordingly, loans for buying social housing will be classified with a lower risk coefficient when calculating the capital safety ratio for banks. This move is to create room and encourage banks to disburse loans for the purpose of buying social housing according to the Government's policies and projects.

In addition, Circular 22 also reduces the risk coefficient for the form of credit granting to finance industrial park real estate business projects from 200% to 160%. Loans serving the purpose of agricultural and rural development are also applied a risk coefficient of 50%.

Regarding regulations on loans for real estate and other housing, the State Bank affirmed that they remain unchanged compared to before.

According to the new regulations of the State Bank, the condition of completed houses according to the house purchase contract only applies to home mortgage loans (which are applied with a lower risk coefficient compared to other real estate secured receivables).

In case an organization or individual has a need to build or buy a future house and mortgages the future house, it will be a case of a loan secured by real estate as prescribed in Clause 10, Article 2 of Circular 41 and the corresponding risk coefficient as prescribed in Clause 10, Article 9 of Circular 41 will be applied.

Thus, the State Bank affirms that this regulation does not restrict the rights of organizations and individuals to buy future housing, and is not contrary to current regulations (Civil Law, Housing Law, Real Estate Business Law, Investment Law 2020, Law on Credit Institutions 2024).

Sky-high apartment prices

According to the Ministry of Construction, in the fourth quarter of 2023, according to the aggregated reports of localities and survey information of market research organizations, apartment prices will continue to increase in the two major cities of Hanoi and Ho Chi Minh City, especially in central areas.

There are almost no projects in the affordable apartment segment (price under 25 million VND/m2) on the market, but mainly in the mid-range apartment segment (price 25-50 million VND/m2) that are eligible to mobilize capital and trade.

Specifically, in Hanoi, in the fourth quarter of 2023, according to the summary report, some projects had an average price increase in areas such as: Thanh Xuan district increased by about 3.5%; Ha Dong district increased by about 3.7%; Hoang Mai district increased by about 3.8%; Nam Tu Liem district increased by about 4.1%...

In particular, the selling price of affordable apartments is 25-35 million VND/m2; the selling price of mid-range apartments is about 35-50 million VND/m2; the selling price of luxury apartments is over 50 million VND/m2, commonly at 60-70 million VND/m2.

Sharing about this issue, Mr. Nguyen Van Dinh - Chairman of the Vietnam Association of Real Estate Brokers (VARS) - said that the price of apartments in Hanoi in the primary market is continuously increasing because there are very few investors with projects in this period. Investors with supply in this period are mostly large investors, not facing financial difficulties, so the offering price is high to maximize profits. The average price of apartments in Hanoi in the primary market is 51.7 million VND/m2.

According to Mr. Dinh, the primary price level is difficult to decrease due to input costs (housing index and construction material prices increase by about 6% each year). Along with that, inflation and interest rates are increasing. In addition, the number of newly approved commercial housing projects is increasingly scarce, and land funds in central areas are also not much left.

In addition, this expert assessed that although the price of apartments in Hanoi in the primary market has not decreased, home buyers still benefit from unprecedented preferential policies in the policy race of investors.

"Buyers can pay in installments, enjoy preferential interest rates, and principal grace periods 2-3 times longer than in previous years. This is boosting the liquidity of the apartment segment in the primary market," Mr. Dinh shared.

Real estate is still an investment channel of interest.

Sharing notes for home buyers to take advantage of the "cheap money" opportunity in 2024, Mr. Manh Quan, co-founder of the Home Buyers Forum, commented that, besides other markets such as stocks and gold, the real estate market is still one of the most important markets that people are interested in investing in at the present time. Although not ready to put money down right away, people are still very interested in the real estate market to be able to make decisions in the future.

Chung cư khu đô thị Thủ Thiêm TPHCM. (Nguồn: TTXVN

Apartment building in Thu Thiem urban area, HCMC. (Source: VNA)

The market is experiencing new developments, especially in terms of cash flow. Currently, according to the State's monetary policy, the interest rates of banks are very low, some banks are even only 3%/year, lower than the inflation target.

“This means that many people depositing money in banks not only does not generate interest, but also depreciates in value, so they will have to find new investment channels, of course including real estate. Therefore, they will be interested in new real estate projects, especially apartment projects. Instead of depositing money in banks, they must find investment channels to maintain the value of money,” said Mr. Manh Quan.

According to the One Mount Real Estate Center for Market Research and Customer Insights, the price of primary apartments in Hanoi in 2023 increased by 16.3% compared to last year in all three segments: affordable, mid-range, and high-end. This not only reflects investment activities for profitable trading, but also shows the real housing needs of the people.

In recent years, reported figures have shown limited supply, and very few completed apartment projects in Hanoi, with only a few projects due to slow construction licensing. Increasing apartment prices are also inevitable.

“Although apartment prices are increasing, people with income conditions or essential needs that cannot be put off - such as starting a new family and having to separate households - still decide to buy,” Mr. Quan commented.

On the other hand, from the increase in apartment prices in recent months, according to Mr. Quan's observation, the market is showing a new shift, many people are switching to choosing ground-level houses and residential land because this type of real estate in some locations, the price per usable area is still lower than apartments and real estate prices have not increased much - reports on the real estate market all show this.

Mr. Quan said that this is also an understandable shift because the price of apartments is getting higher and higher, so people have to change their choices, choosing to buy townhouses and residential land is not a bad choice. Because residential land has a permanent red book, many people also like to buy because the price of this type of real estate is stable, even a form of future assets and can be passed down through many generations.

Vietnamese people can directly buy houses and land.

On January 18, the 15th National Assembly officially passed the revised Land Law. One of the contents that has received much attention is the changes related to land user rights.

The rights of land users are basically maintained in the same policy as the current land law. The revised Land Law stipulates amendments, supplements, and expansion of rights for land users, including those of Vietnamese origin.

Specifically, regarding the rights and obligations regarding land use of Vietnamese people residing abroad: Complete the direction that Vietnamese people residing abroad with Vietnamese nationality who are Vietnamese citizens have full rights related to land (not just rights to residential land) like Vietnamese citizens in the country (domestic individuals) and maintain the same policies as current laws for people of Vietnamese origin residing abroad to contribute to promoting investment and attracting remittances from Vietnamese citizens residing abroad into the country.

According to Clause 4, Article 3 of the Law on Vietnamese Nationality, people of Vietnamese origin residing abroad are Vietnamese people who used to have Vietnamese nationality, whose nationality was determined by bloodline at birth, and whose children and grandchildren are residing and living permanently abroad.

Thus, it can be simply understood that descendants of people who used to have Vietnamese nationality abroad, even if they do not have Vietnamese nationality, still have full rights related to land like Vietnamese citizens in the country.

Because of the expansion of the subjects with land use rights, the Law also expands the cases in which the State allocates land with land use fees. Based on the inheritance of the subjects to whom the State allocates land with land use fees in Article 55 of the 2013 Land Law, Article 119 of the amended Land Law has added a number of subjects to whom the State allocates land with land use fees.

There are 2 cases involving people of Vietnamese origin:

Firstly, people of Vietnamese origin residing abroad and economic organizations with foreign investment capital are allocated land to implement commercial housing projects according to the provisions of the law on housing; use land from receiving the transfer of real estate projects according to the provisions of the law on real estate business in cases where the State allocates land with land use fees collected.

Second, households, individuals, and people of Vietnamese origin residing abroad are allocated land due to compensation in land when the State reclaims land according to the provisions of the amended Land Law.

The Law also stipulates that the District People's Committee shall issue Certificates to land users and owners of assets attached to land who are individuals, residential communities, and people of Vietnamese origin residing abroad.

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