23 projects eligible for 120,000 billion VND loan package
Since early April, the Government has implemented a VND120,000 billion credit program to support lending to investors and homebuyers of social housing and worker housing projects with interest rates 1.5 - 2% lower than the market interest rates for medium and long-term loans. This is a highly anticipated credit package. However, after many times of the Prime Minister's direction, the disbursement rate is still slow. Currently, only 23 projects are eligible for loans.
23 projects have a total investment capital of more than 31,300 billion VND. Of which, the loan demand of these projects is more than 12,300 billion VND. In the localities including: Binh Duong 4 projects; Da Nang 3 projects; An Giang, Kien Giang, Tra Vinh each have 2 projects. The remaining provinces: Tay Ninh, Ha Tinh, Ba Ria - Vung Tau, Bac Giang each have 1 project. Bac Ninh alone has the most at present with 6 qualified social housing projects.
The interest rate of this credit package is regulated to be 1.5 - 2% lower than the market rate. Currently, interest rates are decreasing, so the lending interest rate under this package is also decreasing. However, according to Mr. Nguyen Chi Thanh, Vice President of the Vietnam Real Estate Brokers Association, the interest rate is still high for those who are eligible to buy social housing.
A social housing project in Thu Duc City, Ho Chi Minh City.
"Obviously we need a solution to continue lowering loan interest rates, especially for buyers. Only then can we solve people's difficult housing needs," said Mr. Nguyen Chi Thanh.
Currently, the State Bank is regulating interest rates down to around 6%. Mr. Thanh believes that the appropriate interest rate should be at most equal to the current interest rate mobilized from people, which is about 6%. The income of Vietnamese people in general is 20 times lower than real estate prices. Obviously, the income of social housing buyers is much lower.
"Countries around the world buy in installments for 20-30 years, there is no way Vietnam can pay in 5 years. That is only the initial solution. In reality, leading developed countries like the US, South Korea, and Singapore all have to pay in installments for 20-30 years," said Mr. Nguyen Chi Thanh.
Businesses struggle to qualify for loans
According to the plan, 4 state-owned commercial banks, Vietcombank, Agribank, BIDV, VietinBank, will participate in the 120,000 billion VND credit package. Each bank will spend about 30,000 billion. Currently, BIDV and Agribank have started lending. However, in reality, not all localities have approved projects that are eligible for loans. So how to meet the loan conditions and where are the difficulties with the remaining projects?
The project consists of 16 apartment buildings on an area of over 5 hectares located in a location with 4 surrounding industrial parks with 170,000 workers. With such a scale and favorable location, the project is capable of meeting the great demand for social housing for workers and low-income people, but now asking for a bank loan, the investor is hesitant.
"We are eligible to borrow the VND120,000 billion package. But with this sales speed, it may take us 10 years to sell all the apartments. Even if we were eligible to borrow, we would not dare to borrow because we still have to pay the bank interest and the loan capital, but we do not know where to get the money to pay," said Mr. Nguyen Trung Kien - Director of the EverGreen Bac Giang Social Housing Project.
Borrowing to build a house is difficult, and the conditions for home buyers are equally difficult, causing the market to not progress much.
At present, only 544 cases fully meet the regulations to buy social housing apartments, which means that more than 90% of the apartments cannot be sold because the buyers do not meet the conditions.
By 2025, Bac Giang province will build and complete 14 social housing projects with more than 27,700 apartments. This target must be completed in only 2 years, but with current conditions, it is difficult for projects to borrow this source of capital.
"For a housing project requiring 100% site clearance, it is very difficult and time-consuming. One project in Bac Giang currently meets the conditions, but 13 other projects that qualify for loans are very difficult to get," said Mr. Vuong Tuan Nghia - Director of the Department of Construction of Bac Giang province.
At the same time, many localities also recommended providing more interest rate support for home buyers and expanding access conditions for low-income workers to create demand for the market.
Need drastic solutions
The Ministry of Construction has also requested 22 key localities to report on loan needs and difficulties and obstacles in implementing preferential loan packages.
According to statistics from the Ministry of Construction, in the first 6 months of this year, 9 social housing projects were started nationwide with a total of nearly 18,800 units. With the current progress, the goal of completing more than 400,000 social housing units by 2025 is a huge challenge, requiring more drastic solutions.
"Credit institutions have instructed branches to implement. The current issue depends on the supply of social housing, that is, the list of projects that the Ministry of Construction and localities will provide. The second is the absorption capacity of people, home buyers, and businesses with this package," said Dr. Can Van Luc, member of the National Financial and Monetary Policy Advisory Council.
"It takes time for investors and localities to complete the procedures according to regulations before they can borrow. I think that the initial period may be a bit slow, but in the future, when localities complete the appraisal, the disbursement will be very fast," said Mr. Hoang Hai, Director of the Department of Housing and Real Estate Market Management, Ministry of Construction.
It can be said that never before have solutions to save the real estate market been issued as much as in the first half of 2023. In particular, the 120,000 billion VND credit package is considered a "lifesaver" to implement the Project to build 1 million social housing units in the difficult context of the economy. However, the project only has real meaning when people and businesses can access this credit package. Prolonging the situation of having capital but not being able to lend is a paradox, especially in big cities like Hanoi and Ho Chi Minh City - where the demand for social housing is the greatest, when there is currently no project eligible to borrow the 120,000 package, this is something worth thinking about.
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