The Struggle for Affordable Housing

Despite the allure of lower mortgage interest rates, many potential homebuyers are finding it difficult to commit to large loans due to high property prices. A couple in Hanoi, for example, has been eyeing a 54-square-meter apartment in the city's eastern area. However, the unit's price, combined with the need to borrow nearly VND3 billion, has made it an unattainable dream for now.

Even with attractive offers like 0% interest for the first two years and a 10% discount on the price, the financial strain on families with children is significant. Similarly, Thu Hoai of HCMC's Thu Duc City and her husband have been searching for a house within their VND2-billion budget. With average mortgage interest rates around 8%, and a minimum cost of VND4 billion for a family-sized home, the couple would need to allocate half of their income to mortgage payments, prompting them to postpone their purchase.

Tu Tien Phat, CEO of private lender Asia Commercial Bank, notes that while mortgage rates are currently at 8-8.5%, much lower than previous years, home loan growth has slowed. Can Van Luc, chief economist at state-owned lender BIDV, adds that although rates have fallen by 2-3 percentage points, "People are opting to delay (home purchases) and wait for more reasonably priced products to enter the market."

The State Bank of Vietnam reports that outstanding mortgages have increased by only 4.6% this year, indicating subdued demand. Real estate market activity, typically high during the fourth quarter, has been unusually slow. Nguyen Van Dinh, chairman of the Vietnam Association of Realtors, highlights that the affordable housing segment has virtually disappeared, with 80% of new projects being high-end.

To address this issue, Dinh suggests promoting social and affordable commercial housing segments. Real estate services firm OneHousing forecasts that while new apartment launches will increase next year, the high-end segment will continue to dominate.