Dream of Owning a House Is Far Away

Getting married for over a year, Ms Luong Bich Hien and her husband have saved nearly VND200 million. When real estate’s price went down, they decided to borrow money and buy a house of under VND1 billion. Giving a deposit of VND 30 million, a week later, they had to pay off the remaining amount to get the house. However, after a week of strolling everywhere to borrow money, they managed to mobilise only over VND300 million. Ms Hien could not get back the deposit.

 

Ms Hien’s difficulty is similar to that of many other young couples. In the opportunity of declining prices in real estate, many people are scurrying to borrow money, but the dream of owning a house is still far away. When the economy is in trouble, money becomes scarce. According to Ms Hien, apartments’ prices decrease to an acceptable level from VND14 million to VND15 million per sq.m, but for buying an apartment, she has to borrow money equivalent to half of the house’s value, for bank’s loans, there is no collateral, for borrowing from friends, relatives, they are also in difficulty, no money… Because of that, having a house in Hanoi is just a dream.

For house buyers, at first, they look for lenders as their families and close friends. However, in this downturn period, they also say “no” to borrowers. Ms Hoang Lan (Dong Da - Hanoi) said “Previously, I received a lot of promises for lending money. But when I came to borrow, they refused, explaining that they did not have money available”.

 

Apart from families and close friends, house buyers also put their hope into banks. The decreased interest rate seems to make their dream come true, but in fact, this chance is so fragile and not easy to reach. In the satisfaction with a VND1.5 billion house in Den Lu area but still lacking VND 400 million, Mr Nguyen Quang Toan, employee of Viettel Group came to a bank. After approving his salary, the bank accepted to lend him money with interest rate of 15 percent per year. But when the bank asked him for collateral, he could not find out.

 

Many apartment buyers usually borrow money and use their new bought apartment document as collateral. In this case, not all of apartments documents are accepted by banks. A credit staff member in commercial bank in Hanoi stated that loan disbursement is the most important target of banks, so just insured and legal projects are capable of collateral.

 

Besides that, banks usually lend in the form of project financing. This means that banks have a handshake to cooperate with investor, and house buyers will use their house as collateral. Nevertheless, this case is not normal, because under-constructed projects can not define their completion, so by the high risk, people are not interested in those. Incomplete documents are also a barrier leading people not to reach this kind of apartment.

 

Regarding lawyer Nguyen Quynh Anh, currently, many building projects have complete documents. This causes difficulties for people when they perform their civil transactions. Moreover, sale contracts are not clear, so this situation also leads to disputes between investors and residents of the building.

 

Mr Quang Anh, Hanoi Construction Joint-Stock Company said that for apartments bought in one or two years ago, investors, who could sell and reimburse their money, are successful because real estate prices are continuously decreasing. In these two months, trading activities increasingly happen, but successful ones are only a few. People, who have needs, can not mobilise enough money, apartment documents are also not complete, and intention of waiting till the price continuously decreasing is not eliminated… Those are the reasons causing a frozen real estate market and even not warm up at this time.