An apartment complex for low-income people in Binh Duong's Ben Cat Town. Disbursement from the $1.38 billion housing stimulus package has stagnated as low-income people are deemed unable to repay their loans in 10 to 15 years. — VNA/VNS Photo Quach Lam

Economists and estate businesses said the market had seen clear improvements. The number of successful transactions in Ha Noi in the first quarter of the year rose by three times over the same period last year, reaching 4,250. Most of the transactions involved apartments with small and medium areas of 70sq.m to 90sq.m.

Deputy Minister of Construction Nguyen Tran Nam said the estate market this year would see more transactions in several segments such as land, apartments and offices. Apartments, especially, of less than VND1 billion ($46,300) that are suitable for low-income earners will sell well.

Experts said it was time for the package to support the market and reduce the housing inventory. However, the package cannot be disbursed fully by June 1, 2016 as the Government's set target.

The Viet Nam Real Estate Association said the disbursement was slow for social and cheap commercial housing projects, despite an increasing number of transactions and reducing inventory.

About VND6.2 trillion ($287 million) or 20 per cent of the package has been disbursed so far.

Chairman of the HCM City Real Estate Association Le Hoang Chau said the disbursement was too low, though 15 banks were contributing to the package.

Chau said regulations stipulated that the total income of eligible low-income earners should be less than VND9 million ($416.7) a month.

However, several commercial banks did not accept the regulation as they believed that the income would not be enough to repay debts.

Nguyen The Hien from Bac Ninh Province is eligible to get a loan from the package. However, several banks rejected his application because they felt he would not be able to repay the loan with his low income.

"I have to consider taking a commercial loan that has a higher interest rate and financial risks. I have paid 30 per cent of the amount for my apartment. If I'm unable to get a loan, I'll have to sell the apartment," Hien said.

He suggested the loan duration should be extended from the current 10 to15 years to 20 to 25 years to reduce the pressure on low-income earners.

A bank representative said the recent regulation promulgated by the construction ministry in March caused the package disbursement to stagnate. Such low incomes would not be able to cover the debt after deducting the daily expenditure.

"The loan comes from people's deposits in banks. That is the reason why banks have been careful in giving loans to avoid bad debts in the future," he said.

Nguyen Hoang Minh, deputy director of the State Bank of Viet Nam's branch in HCM City, said they had sent documents to 15 commercial banks to collect ideas that would then be submitted to the central bank for consideration. — VNS