A VND50 trillion package to assist commercial housing developments may spell good news for the property market. -- Photo danviet.vn

HA NOI (Biz Hub) -- A VND50 trillion (US$2.38 billion) package to assist commercial housing developments may spell good news for the property market, but experts say authorities should prioritise showing homebuyers how to apply.

Deputy Minister of Construction Nguyen Tran Nam told a conference in HCM City on January 30 that the construction ministry and the State Bank of Viet Nam (SBV) were jointly studying the package, which is likely to be disbursed within 10 years with an annual interest rate of seven per cent.

HCM City Real Estate Association Chairman Le Hoang Chau said he is glad to be waiting for a response from the SBV. "This is truly necessary and suitable for the practice of real estate market development," he told the Phap luat Thanh pho Ho Chi Minh (HCM City Law) newspaper.

Chau noted that property firms are in dire need of stable finances to calculate loan costs for operational cycles amounting to at least three to five years. They are currently unable to do this with short-term loans.

Seven per cent will also be "a dreamy interest rate" for property enterprises, which are now subject to annual rates of between 10 per cent and 12 per cent, he added.

Can Van Luc, a senior advisor at the Bank for Investment and Development of Viet Nam, told the newspaper that the authorities were only calling for lenders to offer the VND50 trillion but had not made it mandatory.

Eximbank Deputy General Director Tran Tan Loc and Vietinbank General Director Le Duc Tho have reportedly said that these banks were considering taking part in the programme.

However, many people have raised doubts about the ability of commercial banks to raise money for these long-term loans with the intended interest rates when they are mostly offering preferential loans with rates of between seven per cent and nine per cent and with loan terms of less than two years, according to Luc.

"We need to develop the securities and bonds market to mobilise medium- to long-term capital for banks and enterprises," he said.

Thanh Yen Land General Director Nguyen Duy Minh claimed that both enterprises and homebuyers expect legal documents to be issued, providing detailed guidelines on how to obtain the financial support. The market needs a capital source that is truly accessible, not "spiritual therapy," he added.

According to Chau, many experts suppose that the VND50 trillion package should be offered with a term of 20 years and an interest rate of five per cent to ensure debt settlement ability for the public.

Chau noted that the package is intended to favour property investors, but the real estate market needs funds to be allocated to homebuyers for stable and sustained development. Low- and average-income citizens should be prioritised within the scope of this programme, he noted.

Thuy Lai, a cloth trader in HCM City's Tan Binh market, told the newspaper that many small dealers with monthly incomes of VND15 million to VND20 million ($714 to $952) wish to buy houses. But it will be hard for them to legally prove their income status, which is required for obtaining a housing loan.

"Local administrative procedures for certification are complicated," she pointed out.

A national property bailout package worth VND30 trillion ($1.43 billion) has been implemented for two years in support of social-housing developments. As part of this programme, loans have been offered to homebuyers with annual interest rates of six per cent in 2013 and five per cent in 2014. -- VNS