Bank loans still hot for property purchases

Many buyers are still willing to take the plunge when it comes to property bank loans

“A majority of high income customers have decided to continue seeking loans from banks,” said a report based on a survey  by Vietnam Report, a joint stock company which specialises in economic reports.

This continued interest in loans comes despite the recent Instruction 01/CT-NHNN which spells out a decrease in the growth of credit to less than 20 per cent, against the original plan of 23 per cent.

In particular, the credit for non-manufacturing sectors, especially real estate and securities would be gradually decreased with the portion of credit to these sectors over the total outstanding loans not exceeding 16 per cent by the end of this year.

Le Dinh Thang, director of the Vietnam Union for Technology and Science Association’s Real Estate Consultant and Research Centre, was not surprised that people still wanted to borrow.

“The demand for loans from customers and property developers is reasonable because loans are vital way for many people to get on the property ladder,” he said.

Not everyone, however, is interested in approaching banks to buy property. Results from the Vietnam Report survey show that 25 per cent of respondents planned to buy property with their own money while a further 30 per cent planned to take out loans from sources other than banks.

According to the report, “factors such as the number of family members, loan terms, loan to value and interest rate decrease customers’ willingness.”

The Hanoi-based survey of 400 consumers and individual investors and 20 companies operating in the real estate field as well as direct interviews with real estate experts based in seven of the capital’s districts, showed that the amount of money people were willing to borrow depended on their monthly income.

People earning more than VND20 million ($966) per month were more likely to take out loans to the sum of 30 to 50 per cent of the property’s value. Meanwhile, the majority of people with incomes lower than VND20 million per month (55 per cent) said that they preferred to take out loans totalling less than 20 per cent of the total value of the property.

The Vietnam Report study also looked at trends in the capital’s housing market and found that the most popular forms of property among customers were apartments in high-rise buildings and land plots.

Apartments in high-rise buildings were the first choice for people with incomes lower than VND20 million per month ($966), a group which made up 47 per cent of all respondents. Meanwhile, only 26 per cent of respondents listed semi-detached or private houses as their preferred property.

The majority of developers (60 per cent) said that demand for accommodation valued at less than VND1.5 billion ($72,400) per unit would increase strongly this year.