Need a 'push' for young people to buy houses on their own

Manage

At the age of 34, Mr. Bui Danh N. from Ninh Giang district, working in an administrative unit of the province, managed to buy a 58 m2 house.²in an alley in Cam Thuong ward (Hai Duong city) since the middle of last year. He got married at the age of 28, his wife is also a newly appointed civil servant in Hai Duong city. The total income of the couple is more than 20 million VND per month. Before having children, they still lived in their hometown Ninh Giang with the desire to save money to buy a house in Hai Duong city. However, when they had small children, traveling was quite inconvenient, so they rented a house in the city. Each month, the rent alone was 3 million VND, not to mention many other expenses. After renting for a few months, they determined to find sources of loans to buy a house. The savings were not significant, and they knew that buying a house would cost billions, so they still took the risk of buying and mortgaging the "red book" of the house to borrow from the bank. In addition to the money borrowed from both families and friends, up to now he still has to "shoulder" 500 million VND in bank loans with an interest rate of 7%/year. Every month, managing to pay the principal and interest to the bank is quite tiring for him and his wife.

As for Mr. Hoang Xuan Q. (35 years old), from Thanh Mien district, working as a worker in Dai An industrial park (Hai Duong city), buying a house in the city is almost impossible. “My wife and I have been renting a house in Tu Minh ward for 5 years now but have not dared to think about buying a house in Hai Duong city even though we really want to. Our income is only enough to raise our children, live, and save a little for when we are sick, and worry about our children's future. All the houses in Hai Duong city cost billions, even small apartments cost nearly a billion, both families are poor so we don't have money to buy a house, just rent a house for now,” said Mr. Q.

Young people’s desire to own their own home has been a trend in recent years, according to a survey by a number of real estate sites. When real estate prices have only increased, not decreased, and bank interest rates have always been high, for many young people, buying a house early will also reduce their “debt burden” as soon as possible. Besides a group of young people who are dynamic and bold in investing and can buy a house without being heavily indebted, most young people, especially employees working in state agencies, workers, etc., still struggle to buy a house.

According to a survey by batdongsan.com.vn announced at the Vietnam Real Estate Conference 2024 on December 3, 2024 in Hanoi, based on data comparing average salary with housing prices, in 2024, with an average GDP per capita of about 9.5 million VND/month, a young person born in the 90s needs to work and save for 25.8 years to buy an apartment of about 60 m2.², priced at around 3 billion VND, with a 4.5% interest rate. About ten years ago, this number of years of savings was even higher, over 30 years. Young people still need to work very hard for a long time to be able to buy a house on their own.

Waiting for the combo "preferential loan package, simplified procedures, long loan term"

At the Government Standing Committee meeting working with commercial banks on the morning of February 11, Prime Minister Pham Minh Chinh requested the State Bank and commercial banks to study and continue to have preferential credit packages for both supply and demand to develop housing for young people aged 35 and under. Shortly after, ACB Bank announced the "First Home" loan package for young people with a term of 30 years, the first fixed interest rate period is up to 5 years, and the preferential loan interest rate is only from 5.5%/year.

Mr. Nguyen Duc Quan, Vice President of Hai Duong Real Estate Association, said that this interest rate is suitable for young people to buy a house. According to Mr. Quan, with an average interest rate of 5.5%/year, each month a young family has to pay both principal and interest of about 7 - 8 million VND. "For couples with an income of about 20 - 30 million VND/month, this amount of principal and interest is suitable for their financial capacity," Mr. Quan said.

However, Mr. Quan emphasized that in addition to reasonable interest rates, banks also need to reduce complicated procedures and apply long loan terms, possibly up to 30 years, to reduce monthly payments.

Sharing the same view, a representative of a real estate company in Hai Duong City said that for young people buying a house, the interest rate should only be equivalent to the interest rate for buying social housing, about 5 - 6%. If there is a loan package that both ensures a reasonable interest rate and creates conditions for borrowing for a long period of at least 10 years or more, it will be a very good policy for buyers.

This person also expects that, in addition to preferential loans for young people, there should also be a support package for businesses so that they can develop low-cost commercial projects. “At this time, if there is a preferential credit package for both supply and demand for housing development for young people, it will have a very positive impact on the real estate market. When the supply is diverse and there are many segments for buyers to choose from, the market will develop sustainably,” said the representative of this business.

For young people who want to buy a house, the fact that banks offer preferential interest rates to young people to borrow to buy a house is not enough because the current house prices on the market are too high. "Through research, an average house is about 50 - 60 m²"A house in an alley in Hai Duong City costs about 2-3 billion. Even with preferential interest rates, it is difficult to pay the principal and interest each month if you borrow 70%, or even 50% of the total value of the house," Mr. Hoang Xuan Q. added.

In fact, many incentive packages are currently "unsold" because the conditions and procedures are too strict, making it impossible for beneficiaries to meet them. The fear of procedures still haunts many people, especially young people. In addition, the loan package term is long, so the risk of interest after the incentive is very high, so there needs to be a solution to make borrowers feel more secure. "The 5.5% interest rate only applies for the first 5 years. After the incentive period, if the interest rate increases (according to the floating interest rate), the monthly payment will change, at that time it will be very difficult to manage", said Mr. Q.

Reasonable interest rates, less complicated loan procedures, and long loan terms to reduce monthly payments are the biggest wishes of young people when calculating the purchase of a house. "How can young people buy a house, each month only having to pay principal and interest of about 6 - 8 million VND? It would be best. A couple with an income of about 20 - 30 million VND/month, raising two children, and paying a home loan of over ten million VND/month is difficult to do," said Mr. Quan.