Additional US$127 million loans for social housing purchasers

SGGP
The Ministry of Planning and Investment was assigned to provide additional VND 3 trillion (US$127 million) from the state budget for social housing loans, which is a good news for low-income persons who need affordable housing.

Additional US$127 million loans for social housing purchasers

According to the Ministry of Construction, there has been demand of around 440,000 apartments during the period 2011-2020 with 134,000; 110,000; 41,250; 35,700 and 11,500 ones in Ho Chi Minh City, Hanoi, the southern provinces of Binh Duong and Dong Nai and the Central City of Da Nang respectively.
However, until now, just 198 housing projects with 81,700 apartments have been built in localities accounting for 33 percent of the plan.
To support the development of an affordable housing industry, the Ministry of Construction was asked to add amendments to fix shortcomings in the decree No.100 for the government’s approval in the fourth quarter of 2020.
Moreover, the Ministry must submit policies and mechanisms to tackle barriers along the way for low-incomers. The Ministry must work with authorities in Ho Chi Minh City and Hanoi to come up with plan to boost social housing development to meet demand of low-income populations especially workers.
This US$127 million package is the second after the first in 2012; it was expected to help more low-income laborers to purchase their affordable house and to supply the market with more cheap apartments at a time when real estate market have slumped.
According to the Vietnam National Real Estate Association (VNREA), despite challenges and changes during the period 2017-2019 , real estate market has basically developed stably and professionally with less risks compared to the previous years. The market has faced difficulties from end of 2019 to early 2020; therefore, many investors got into financial difficulties leading to bankruptcy.
According to Housing Law, the government must grant haft of capital to social policy bank annually while the remaining banks will mobilize from other sources to support those who purchase or rent social housing.
Additionally, the government will grant money to compensate four state-owned Vietcombank, BIDV, Agribank, Vietinbank which offer low social housing lending rate. If the state budget grants VND1 trillion for compensation of interest rate of 3 percent – 4 percent, four banks can mobilize additional VND25,000 - VND30,000 for housing purchase creating good liquidity for social housing loans.
At present, after the government has allocated additional VND2 trillion to compensate loans with low interest rate for four commercial banks including Vietcombank, BIDV, Agribank, Vietinbank which provide housing social loans at low interest rate; around VND50,000 – 60,000 billion will be mobilized for housing social loans.

By Minh Huy - Translated by Anh Quan

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