There are plenty of potential homebuyers in Vietnam, but their efforts are being rebuffed thanks to skyrocketing interest rates and the subsequent hesitancy in banks to give out loans. Property developer CapitaLimited reports interest rates as high as 22.42% for homebuyers and 25% for some businesses. Refinancing rates are also up to 15% in the country and the across-the-board increases are slowing demand. Devaluation of the dong by 7% and higher development costs are also not helping, although experts believe inflation will ease by the end of the year. For more on this continue reading the following article from Property Wire.
High interest rates are slowing down the residential property market in Vietnam as potential buyers find it difficult to get loans, it is claimed.
According to CapitaLand Limited, Southeast Asia’s biggest property developer, buyers cannot get bank financing as interest rates have soared to 22.42%, one of the highest in the region.
The central bank has increased its refinancing rate to 15% from 9% while lending costs for some businesses are up to 25%.
‘A lot of purchasers want to buy but they may not be able to borrow money. So the whole market has more or less slowed down,’ said Yip Hoong Mun, deputy chief executive officer of CapitaLand’s Vietnam unit.
The Singapore based company said last year it planned to increase its business in Vietnam from total assets of S$400 million to S$2 billion over three to five years.
Yip said other obstacles include higher than anticipated project financing costs, a slow development process, and currency devaluations. Measured at official exchange rates, the Vietnamese dong has lost about 7% of its value this year.
‘They do not have good control of fiscal and monetary policy. Inflation has the highest impact. It is a persistent problem for Vietnam, even though the general consensus is inflation will go down after this year,’ added Yip.
CapitaLand is still seeking investment opportunities in the country ‘because a lot of landowners or local developers may want to partner with foreign developers like us,’ Yip explained.
This article was republished with permission from Property Wire.