The credit package of VND30 trillion (US$1.4 billion) that aims at providing soft loans for low-income people to buy houses is being deployed but very few people is accessible to this soft credit because of many problems emerging from controversial disbursement procedures at banks as well as public disagreements.
Fumbling about big cash hoard
To support the struggling property market and create the opportunity for low-income earners to buy houses, the Government has issued the Resolution 02 with relatively adequate solutions like reviewing laws, reviewing plans, adjusting projects, adding capital to demand and supply sides, and others. The support credit package was launched but the State Bank of Vietnam (SBV) and the Ministry of Construction (MOC) – the two major responsible agencies – are still fumbling about this support package.
Although the Ministry of Construction and the State Bank issued two circulars with specified and detailed instructions for this lending mechanism, up to 70 percent of the cash hoard cannot be touched because of many problems arising from the implementation process.
The most significant problem is the unavailability of collaterals for the loan. The most practicable solution is to use the to-be-bought house as the mortgage for the loan but banks seem to balk at this measure because items branded social housing are not allowed to be traded or exchanged in a given period of time. Meanwhile, banks are under high pressure to recollect loans to reduce bad debts rather than add new bad debts. As a result, the deployment gets stuck.
Professor Dang Hung Vo said that the housing support for the poor is necessary in any context and needs priority policies. However, if we use the poor to warm up the real estate market, we need to reconsider this way. He said the supported people must be the ones with real demand, financial capacity at a certain level. They only need a small financial support to buy a house, not the ones without anything in their hand. “We need to make clear this point. Otherwise, we will confront with criticism because we do not give priority to the poorest group in the society. The cash hoard of VND30 trillion is already at banks, they only need to disburse it to get things done. But, if this process seems to be too hard for stakeholders, the clearance of real estate inventories worth billions of US dollars must be much harder. The market needs a good support to clear the “blood clot,” rather than increase the supply for downmarket segment. To date, I do not see any specific programme to touch that “blood clot” – the key to defreeze the market,” said Professor Vo.
Flexible in handling inventory
Although the market has been frozen for a long time, the supply keeps going up with the completion of many completed projects, mainly at midmarket and upmarket classes. These segments are actually unaffordable for most people. This is also one of the reasons why the liquidity of the market is very low in a long time. According to experiences in many other countries, there are many ways to clear the “blood clot” of the market like setting up debt trading companies, issuing bonds and setting up real estate investment funds. Besides, the Government can issue bonds to raise funds to deal with unsellable real estate products. However, in our country, it is more difficult because the “blood clot” is built up by many financial sources, not only from banks and investors.
Dealing with unsellable houses in midmarket and upmarket segments is a really hard task. Professor Vo noted that developers need to consider practicable programmes to clear their inventories in these segments. They can transform into commercial centres, entertainment centres or houses for rent for foreigners. Recently, the Ministry of Construction has issued a policy allowing foreigners to buy houses in Vietnam, a move expected to heat up the frozen segments. Remaining unsold items will be taken by debt trading companies.
Luong Tuan
Đăng ký: VietNam News
