Interest rates are down but people still don't borrow money to buy real estate

The real estate market is witnessing a paradox: home loan interest rates have decreased significantly, but people are still hesitant to borrow money to buy a house to 'settle down'.

Despite low interest rates, people still do not borrow much money to buy real estate due to high housing prices - Photo: NGOC HIEN

Interest rates drop sharply, but real estate buyers remain hesitant

At the "Vietnam Real Estate - VRES 2024" Conference organized by Batdongsan (a member of PropertyGuru Real Estate Technology Group) in Ho Chi Minh City on December 5, Dr. Can Van Luc (member of the National Financial and Monetary Policy Advisory Council) pointed out the paradoxes of the real estate market.

Citing data from the State Bank, Mr. Luc said that by the end of September 2024, outstanding real estate credit reached VND3.15 trillion (accounting for nearly 21% of the total outstanding debt of the economy). Real estate loans increased by 9.15% (higher than the 9% increase in general credit), of which real estate business loans increased by 16% but housing loans increased by only 4.6%.

Assessing current interest rates of commercial banks, this expert said that interest rates have decreased sharply compared to 2023, in general, current interest rates are favorable for the real estate market.

However, according to Mr. Luc, despite low interest rates, people still do not borrow much money to buy real estate or to repair their homes.

This economist believes that the main reason is that real estate prices remain high, beyond the financial capacity of the majority of people.

A survey by Tuoi Tre Online shows that home loan interest rates at many banks currently fluctuate around 6-8% per year, significantly lower than the 10-15% per year last year. Many banks also offer preferential loan packages with attractive interest rates such as 5-6% and fixed interest rates for 2 years.

Investors also offer incentives on payment time, principal grace period, interest rates, and reduced payment amounts to receive the house...

However, this move does not seem to be enough to "save" the sluggish real estate market.

Interest rates cool down but house prices remain "hot"

Meanwhile, Batdongsan representative announced the survey results showing that up to 56% of survey participants of this platform want to buy an apartment with a price under 2 billion VND, but the number of apartments posted in this price range on the platform in 2024 will only reach 17%. For apartments priced above 2 - 5 billion VND, there is 30% demand but the number of posts is up to 50%.

For private houses, 69% of survey participants have a need to buy at a price of 2 - 5 billion VND, but the number of private house listings in that price range on this platform is very limited, at 17%. This difference causes 84% ​​of buyers to still have to borrow with a common loan level of 30 - 50% of the real estate value.

Mr. Dinh Minh Tuan - Southern Regional Director of Batdongsan - said that with two major cities, Hanoi and Ho Chi Minh City, the average real estate selling price in Hanoi has increased significantly in most segments. In particular, in November 2024, the average apartment selling price in Hanoi reached 61 million VND/m², surpassing Ho Chi Minh City (55 million VND/m²).

The survey of this platform also shows that out of 12 projects for sale in Ho Chi Minh City, only 4 projects are priced under 60 million VND/m², the rest are projects priced from 88 - 250 million VND/m².

Speaking to Tuoi Tre Online , Mr. Tran Manh Chi - Deputy General Director of Dong Tay Property Company - said that real estate prices are still the biggest barrier for home buyers. Although loan interest rates have decreased, with current real estate prices, the monthly payment is still a big burden, especially for those with average incomes.

Dr. Can Van Luc commented that in order for people to increase investment in real estate, businesses need to strive to reduce or stabilize real estate prices in some projects and segments through appropriate promotional forms, accepting smaller but sustainable profit margins.

Source: https://tuoitre.vn/lai-suat-giam-nhung-nguoi-dan-van-khong-vay-tien-mua-nha-dat-20241205181116868.htm