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Rate cut raises hopes of property recovery
Industry insiders are hoping the central bank’s decision to trim the interest rate by 1 per cent will breathe life into the country’s dormant property market.
A recent Ho Chi Minh City-based survey showed the market lacklustre performance in recent months was not because supply was outrunning demand or massive roll-outs by investors, but due to tightening credit over a prolonged period.
“Strangling credit has hurt the market. Firms have found it hard to get loans or have obtained loans at high lending rates, driving up input costs and then pushing up end product prices.
Meanwhile real home-buyers have not dared to take loans for house purchases with lending so costly,” said Dr. Le Xuan Nghia, National Financial Supervisory Committee deputy chairman.
Nghia asserted the property market could quickly revive once this issue was tackled.
General director Hoang Anh Tuan at Tac Dat Tac Vang Real Estate Joint Stock Company said once mobilising rates were eased and putting money into banks lost its charm, more people would inject their cash into more lucrative channels like stocks and the property market.
“We still do not know when lending rates will be eased and could it make easier for firms to get loans after Central Bank decided to cut rates by 1 per cent point. This is good news, indicating the government’s policies to rein in inflation are starting to bring rewards,” said Hoang Anh Sai Gon Real Estate Company general director Doan Chi Thanh.
Former deputy minister of Natural Resources and Environment Dang Hung Vo said the [property] market had to some extent restructured itself after a long hibernation.
“The market will bounce back with better credit lines. However, the low-end housing segment will pick up more rapidly because of huge demand while the high-end segment will continue to see slow movement,” said Vo.
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