Package looks to provide silver bullet

illustration photo

The State Bank and Ministry of Construction-backed package will be implemented from June 1, with low-income people, state officials and soldiers able to borrow at preferential rates for purchasing social housing and apartments of smaller than 70 square metres and priced under VND15 million ($720) per square metre. In addition, social housing developers can borrow from this package.

The package reserves 30 per cent of its resources for developers who have been building social and cheap commercial houses and 70 per cent for buyers.

Nguyen Tran Nam, Deputy Minister of Construction said the package would both create new supply of low-priced homes and increase purchasing power of this sector, which would then have positive impacts on other segments.

Nam said with the release of this VND30 trillion package, the economy and the real estate market would have positive sign after a long time of downturn.

“The support for buyers who are lower income earners will make an expanded impact on many other fields such as creating jobless and reducing bad debt,” Nam said.

“The economic circumstances have been improved in the last four months of the year and we have been witnessing many positive signs. Especially completed real estate products and those properties priced at less than VND15 million ($750) per square metres are receiving much attention from the buyers and have high liquidation,” Nam said.

The package follows the government’s Resolution 02 to support real estate market which was approved early this year.

It took time for the circular to come out due to, according to the State Bank’s Credit Department head Nguyen Viet Manh,  the fact that the State Bank had to carefully considered the many different aspects relating to this resolution, mainly in social security, cash inflows and inflation.

The State Bank said the interest rate would be kept at 6 per cent throughout the first year. In the following years the interest rates will be adjusted, equalling half of the market interest rates but should not be higher than 6 per cent.