In the Vietnamese concept, the value of property, land and house is calculated in gold. The fluctuation in gold price has little impact on those buying house in instalments in VND but seriously hurts those buying houses on gold instalments.
Hanoi and Ho Chi Minh City’s policies to build hire-purchase houses for low-income earners have provided shelter for many poor people. After Hanoi revoked land in Vinh Tuy and Cau Nghe wards to erect Thanh Tri Bridge, some 200 households bought resettlement houses on instalments.
With escalating prices of gold and USD, many households have to pay more money for their hire-purchase shelters. The amount of money may be equal to that of a much better house at the time they decided to buy their current ones.
If buyers pay instalments duly, the house price will be based on the gold price at the time the mutual contracts were signed but if they fail to, the price will be based on the current gold price, inclusive of interest rates. Therefore, many people in the capital city living in houses built by the People’s Committee are anxious about the current soaring gold price.
This is also the case for people living in instalment houses in Trung Hoa and Nhan Chinh resettlement zones. If a household buy an 80 square metre house at a price of VND320 million, it pays VND220 million at the contract signing time and VND100 million will be paid on instalments over 10 years. The VND100 million instalment will be converted to gold at the contract signing and the buyer must pay in gold at the due time.
As a result, if a household bought a house in mid-2005 when the gold price stood at over VND8 million a tael, equalling over half of the current VND14 million a tae,it means would have to pay an additional VND70 million to its previous VND100 million, in the aftermath of the gold price rise. As such, the additional money is equal to the original house price if the price is high. Many people said they will lose their houses as they fail to pay due instalments at the current gold price.
Authorities’ immediate actions
Before the petition from its citizens, Ho Chi Minh City People’s Committee approved the proposal of the Department of Finance not to use gold as a yardstick to sell hire-purchase houses for resettlement dwellers. Gold is still used as a benchmark for selling houses in other forms.
The citizens are very happy about this. Mrs Nguyen Thanh Nga, a buyer in the Lo Gom project, said: “I owed three months’ instalments because of the high gold price. I hope the authorities will implement the new mode of payment quickly.” Nga added that she was paying a monthly interest of VND1 million (based on bank interest) or three-tenths of a gold tael (equalling VND3.5 million based on gold)
In Hanoi, the Department of Natural Resources and Environment said it will propose that the city’s People’s Committee change the method of gold-based house purchases and sales into money-based ones. However, the calculation of interest rates in the money-based method is still at odds.
Doan Phuong
Vietnamese
