Categorized | International

Vietnamese Housing Market Slows Down

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The residential real estate market in Vietnam slowed down last month, as interest rates and lending fees both skyrocketed. The ridiculously high rates and fees have made it possible for only the wealthy elite to secure home loans. As such, the average homebuyer in Vietnam has, and will continue to have an exceedingly difficult time trying to secure a loan to buy a house.

The increase in rates and fees has basically caused lending to come to a complete halt. The demand for residential and commercial properties still strong exists in Vietnam, though the inability for most to borrow money has caused the market to slow down tremendously.

According to various financial and lending experts, the skyrocketing interest rates are due to higher costs than anticipated for project financing. In addition, overall housing development has been quite slow, and the value of Vietnam’s dong has dropped fairly significantly this year.

Those three factors have caused many lenders to turn their backs on domestic investors. As such, residential property sales are expected to plummet well into 2012 unless changes are made.

While domestic investors are having a hard time securing the financing needed to buy property in Vietnam, many of the lenders are looking towards various foreign investors from across the globe. Many of the most affluent foreign investors pay for properties in cash, thus averting the high interest rates.

There has been no indication thus far as to how long the new, extremely high rates will last. Real estate agents certainly hope that the rates drop substantially in the next few months. However, for that to happen, it is likely that the value of the currency will have to increase first.

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About Nancy Raven

Nancy is the main writer for the International section of the website. Sometimes she also helps Drew out on the Finance/Mortgage section as well.

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