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Banks face tough task
Secondary investors are shying away from purchasing property due to high interest rates and a lack of liquidity.
Bui Tien Thang, Deputy General Director of Sai Gon Thuong Tinh Real Estate Joint Stock Company (Sacomreal), said that up to 70 per cent of potential homebuyers were in need of financial support to buy an apartment. However current interest rates were too high for them. With deposits attracting an average 14 per cent, many investors are considering putting their funds in banks rather than risking it on property.
Consequently, there has been a significant dip in the residential recently.
Le Hoang Chau, Chairman of the HCM City Real Estate Association, said that property developers can ride through the storm of increasing input costs and high interest rates provided they find outlets for their products.
The problem is that the residential market has been very quiet, especially in the luxury sector, Chau said, adding most property developers would face tough challenges this year.
According to many bankers, it is not just property developers but also banks offering real estate loans that are facing difficulties. The latter have had to reduce their property loans to ensure a credit growth rate of less than 20 per cent by the year-end as required by the central bank.
Credit for the non-production sector at some banks are at 35 to 44 per cent of the total outstanding loans, twice the central bank's requirement.
Trinh Van Tuan, General Director of the Orient Commercial Joint Stock Bank, said that 32 per cent of the OCB's total outstanding loans by March was in the non-production sector, majority of which was invested in real estate projects.
To keep this year's credit growth of 20 per cent, OCB started to restructure its outstanding loans in ways that would halt loans for real estate and securities purposes, Tuan said, and adding that, "it will not be an easy job".
Tran Phuong Binh, General Director Dong A Commercial Joint Stock Bank, said, "With the policy of tightening real estate-backed loans this year, commercial banks will find it hard to promote lending to individual customers."
Thien Ly
vienamnews
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