The VND30 trillion (nearly $1.5 billion) credit stimulus package granted by the Government has still not shored up the local real estate market, which has been stagnant over the past two years.— Photo vinacorp

by Le Hung Vong

(Biz Hub) — The VND30 trillion (nearly $1.5 billion) credit stimulus package granted by the Government has still not shored up the local real estate market, which has been stagnant over the past two years.

According to Nguyen Van Duc, deputy director of the HCM City-based real estate company Dat Lanh Ltd, complex formalities related to the programme have hindered clients from obtaining access to the stimulus package through commercial banks.

Many banks have rejected applications for loans from clients who sought to buy apartments in projects in the first stage of construction.

One of the major documents required by banks is official certification from local authorities that shows the person does not own a home.

This is another hindrance facing home buyers because relevant agencies are only willing to certify the residence status of a customer at the locality instead of certifying that he owns no house in the area.

Additionally, there are few apartments that match the conditions for loans under the stimulus package.

Under these conditions, these apartments must be under 70 sq.m and be sold for VND15 million per sq.m.

With VAT deduction of more than 20 per cent of management fees, the selling price would be VND13.3 million per sq.m.

Such a low price would not be available in HCM City because the investors have to pay for land or compensate for site clearance (at market prices), and pay land rentals and high construction costs.

Duc said the number of apartments in HCM City is 10 times as high compared with those in Da Nang, but Da Nang has provided 30 per cent of its quotas under the credit stimulus package, while HCM City has only allocated 10 per cent of its quotas.

"It means that the number of affordable apartments in Da Nang is three times as high compared with HCM City.

Low land rentals and construction costs helped investors build apartments at lower prices that are affordable for home buyers," Duc told Viet Nam News Agency.

The price of VND15 million per sq.m is not available in HCM City, but can be reached in other provinces across the country, said Duc.

According to a report from the HCM City People's Committee, the city still has nearly 12,500 unsold apartments worth a total of VND22,246 billion.

These include 3,935 apartments that have not been built, worth $8,831 billion, and 3,955 unfinished apartments worth VND12,414 billion.

The director of HCM City's Construction Department, Tran Trong Tuan, said that investors of 10 property projects had applied to turn 9,270 apartments in these projects into accommodations for low-income families.—VNS