At present, the State management agencies are removing legal obstacles for real estate projects. Photo kinhtedothi.vn

HÀ NỘI — The State Bank of Việt Nam (SBV)'s reduction of policy rates on May 25, the third cut in a row since mid-March, is expected to give a boost to the stagnant real estate market.

Earlier, the central bank decreased the policy rates on March 14 and 31.

The SBV said that under the National Assembly’s resolution and the Government and the Prime Minister’s directions, the monetary policy has been governed in a proactive, flexible, timely, and effective manner and combined with the fiscal and other macro-economic policies so as to help control inflation, stabilise the macro-economy and the monetary market, and reduce interest rates to assist with economic growth recovery.

Economist Cấn Văn Lực, member of the national financial and monetary policy advisory council, described the recent interest rate cuts by many banks as positive for the real estate market since lower lending interest rates will benefit both sellers and buyers.

He elaborated that pressure from capital costs will ease as developers can access loans with more reasonable interest rates, issue more attractive sales policies, and have more resources to complete unfinished projects and launch new ones.

Property demand will also recover since high lending rates have previously discouraged customers from buying real estate. Besides, customers have waited for property prices to go down further, and with more interest rate cuts, prices will continue declining and purchasing power may rebound, Lực added.

Echoing the view, the BSC Securities Company perceived that the reduction of regulatory interest rates will pave the way for lowering interest rates, which in turn will help enterprises improve their performance and stimulate customers’ purchase decisions.

Experts from the Việt Nam Association of Realtors (VARS) said the monetary policy tightening had shown signs of a slowdown, and the tightening period is likely to end by the end of the second quarter of 2023.

Following the SBV’s reduction of regulatory interest rates thrice since March to aid enterprises and the economy, commercial banks have cut deposit interest rates. Thanks to lower rates, including bond and inter-bank ones, customers now can access loans with interest rates of 10-11 per cent and even lower.

However, VARS experts also noted only when average interest rates drop to under 10 per cent can the property market strongly “respond”.

A VARS survey revealed that total deposits made in the banking system increased by nearly VNĐ900 trillion (US$38.3 billion) in 2022, 46 per cent of which was made in Q4.

Phạm Anh Khôi, a member of the VARS market research working group, said Q3 of 2023 will be the key point in time when a large sum of deposits at banks will start becoming mature, and the market will see whether or not money flows will return.

VARS Chairman Nguyễn Văn Đính predicted that in the optimistic scenario, the property market will bounce back from late Q2 and early Q3 this year, when real estate prices may become more reasonable, especially in the landed segment, and stimulate purchase decision.

However, according to Nguyễn Đức Lệnh, deputy director of the State Bank of Việt Nam's branch in HCM City, a deep reduction in lending interest rates at present is impossible.

If the interest rates fall, people and businesses easily get loans. It will be a great motivation to help the domestic market in general as well as the real estate market recover quickly. But the reduction in interest rates will make inflation up, Lệnh said. 

Meanwhile, according to Võ Hồng Thắng, DKRA Group's deputy director of research and development (R&D), to attract capital to the real estate market, the macro economy must grow positively and confidence in the property market must be restored.

At present, the State management agencies are removing legal obstacles for real estate projects. But this action needs to be carried out quickly and efficiently, making the market strongly recover. Those will encourage the buyers to put money down. Investors also need to regain trust from customers, besides adjustment for the interest rates, Thắng said. What is more important is that all investors in the market have to do so but not some, especially large and branded enterprises.

Another solution to stimulate real estate consumption is to accelerate disbursement of public investment, focusing on developing key infrastructure projects. Because, according to property companies, transport infrastructure develops to make value of real estate increase accordingly. — VNS