From the last quarter, the number of transactions has declined as property buyers and developers struggle to access loans, said Le Hoang Chau, president of Ho Chi Minh City Real Estate Association (HoREA). VnExpress.
Developers are also finding it difficult to raise capital from bonds, as evidenced by a 79% quarterly drop in mortgage bond issuance in the second quarter, indicating that they are ‘thirsty’ for funding and that their cash flows are disrupted, he added.
Pham Lam, vice president of the Vietnam Real Estate Association, shares the same concern.
The real estate market over the past six months is expected to enter a “rainy season” due to the impact of the credit crunch and weak sales, he said.
Although the State Bank of Vietnam claimed that real estate credit growth reached more than 12% in the first five months and was higher than the rate recorded during the same period in recent years, insiders of the industry have repeatedly complained that they are struggling to get loans as banks claim to have reached their “ceiling” on mortgages.
Chau also said another real estate market problem is the shortage of supply, especially in the affordable segment.
From January 2021 to June this year, no apartments with a price of VND 30 million or less per square meter were launched in HCMC, he said.
The city instead saw the high-end segment account for 74% of supply, with the remaining 26% comprising the mid-priced segment, he added.
The shortage of affordable properties has had a direct impact on low-income and vulnerable people in the city, Chau said.
Another worrying factor is the delay in the legal approval process which prevents developers from estimating when their projects will be completed, he said.
The HoREA chairman called on the government to loosen its grip on mortgage lending and let banks finance the projects of reputable developers.
“Banks must resume lending to reputable developers to finance their projects. They should also allow individuals to borrow to buy or build residential properties.”
Economist Dinh The Hien said this year may not be an ideal time for the property market as prices hit an all-time high amid low liquidity.
“The real estate sector’s difficulties have only just begun.”