Many experts on the property market propose to cut interest rates of loans for investing or buying social housing products to 4.5-6 per cent per year from 8.2-8.7 per cent at present.

According to a survey from the Vietnam Real Estate Association (VNREA), investors and buyers of social housing projects must take loans with high interest rates. Specifically, the interest rate is 8.7 per cent per year for investors and 8.2 per cent for home buyers. These interest rates have made it difficult for investors and buyers.

Lê Hoàng Châu, chairman of the HCM City Real Estate Association (HoREA), expressed that the credit package of VNĐ120 trillion does not meet the criteria of a preferential credit package for social housing. A preferential credit package for social housing projects must meet two important criteria: low interest rate and long-term.

According to Châu, the commercial banks' average interest rate at 8.2 per cent per year for buyers is still too high compared to the financial ability of low-income people. 

Nguyễn Chí Thành, deputy chairman of the Vietnam Real Estate Brokers Association, agreed that the interest rates for eligible buyers of social housing projects are still high. At the same time, the income of buyers of social housing is currently much lower than real estate prices. 

Therefore, it is necessary to lower the interest rates for homebuyers, Thành added. 

According to many studies, the income of workers is often very low. About 75 per cent of them have to borrow money to pay for their living costs, the Vietnam General Confederation of Labour reported. With the loan interest rate at 8.2 per cent a year, they cannot buy social housing.

For someone with a stable income of VNĐ12 million a month, they must take up to 37 years to pay off the loan at high interest rate. 

However, if they can borrow at a lower interest rate of only 4.5 per cent a year, the payment period will be shortened to about 19 years, he said.

With the goal of reducing financial pressure on investors and buyers, VNREA has proposed the interest rate at 6 per cent a year for social housing developers and 4.5 per cent for homebuyers, lower than 8.7 per cent and 8.2 per cent at present.

Along with that, VNREA recommends that the State should have attractive policies for investors, such as land fund, investor selection, land allocation. Time to deal with investment procedures should be cut from 24-36 months to 12 months.

For real estate businesses, VNREA suggests that they restructure products and choose housing segments in line with income of buyers and market demand. They also need to improve corporate governance ability; and re-determine the selling price.

At the same time, they should strictly comply with commitments with investors.

According to the Ministry of Construction, up to now, about 108 social housing projects are under the process of investment and construction.

The ministry has announced a list of 24 eligible projects to participate in the VNĐ120 trillion credit package based on the reports from 11 provinces and centrally-run cities. The total investment capital for these projects is VNĐ31.673 trillion. The projects have the loan demand at VNĐ12.442 trillion.

In the first seven months of this year, 10 projects of social housing and housing for industrial park workers started construction with 19,853 units. — VNS