HCMC – The ongoing credit crunch and the Government’s restrictions on corporate bond sales have put an additional strain on the debt-ridden real estate sector.
Savills Vietnam’s survey pointed out that homebuyers must apply for a mortgage worth around 50% to 80% of the total value of a mid-end apartment if they want to own one.
However, the credit crunch, inflationary pressures and buoyant interest rates have demotivated them from buying homes, thereby making the housing market’s liquidity problem worse.
“Although property firms offered steep discounts, they still failed to attract buyers,” said Vo Thi Khanh Trang, deputy head of Savills Vietnam’s research department.
As buying a house requires a lot of money, most people cannot afford it without taking out mortgages, she added.
Meanwhile, credit rating agencies expressed alarm at the mounting debts and soaring capital risk in the housing sector, as 71.6% of real estate bond issuers are unlisted companies. Their debt-to-equity ratio registered at 8.1, while the figure stood at only 2.5 for listed companies.
The real estate sector accounted for 20.4% of the total bonds issued in 2022, equivalent to nearly VND52 trillion, showed data from the Vietnam Bond Market Association.
Statistics from the State Bank of Vietnam showed that outstanding loans in the housing sector amounted to nearly VND800 trillion as of late 2022, doubling the figure recorded in late 2016. That, coupled with VND419 trillion worth of real estate bonds, brought the sector’s total debt to VND1,200 trillion.
In the next two years, real estate bonds worth over VND230.8 trillion will be due, accounting for 35.2% of the total value of bonds in the market.