Interest rate for home loans forecast to stay low in 2021 hinh anh 1The interest rate for home loans is expected to be kept low next year in a bid to stimulate demand for the real estate market. (Photo:

Hanoi (VNS/VNA) - Interest rates for home loans are expected to be kept at a low level next year to stimulate demand for real estate, which coupled with macro-economic recovery and an increase in supply is hoped to promote the housing market's development, according to a report from the securities company VNDirect.

Since the outbreak of the COVID-19 pandemic in January, the State Bank of Vietnam (SBV) has slashed rates three times, in March, May and October to aid economic recovery, which helped ease the pressure of provision cost for banks and interest expenses for customers and enabled lenders to introduce stimulus packages for home purchases.

According to Tran Khanh Hien, deputy head of Investment Analysis at VNDirect, the rate for home loans was reduced by about 1.8 percentage points to 9.5 percent, the lowest rate in the past decade.

VNDirect also predicted a robust recovery of the housing market next year fuelled by the country’s macro-economic recovery.

The global production shift expected to drive investment flow into Vietnam will benefit the real estate market, especially industrial property. The Government’s efforts to hasten public investment disbursement with a focus on infrastructure development have also aided the real estate market.

The report also forecast that new supply will skyrocket due to the expectation that the amendments to the Law on Construction and the Law on Investment 2020 which take effect from the beginning of next year will tackle legal bottlenecks.

With a number of projects set to resume construction in 2021, VNDirect forecast new supply in HCM City will increase by 10-15 percent to reach 17,000 apartments.

In Hanoi, the supply is predicted to increase by 50-60 percent in 2021 to reach 23,000 apartments, mainly from mega-projects like Vinhomes Smart City, Vinhomes Ocean park, Sunshine Empire and Gamuda City.

Regarding housing prices, VNDirect said that the trend is to rise, driven by improved demand and low-interest home loans.

Still, there will be no market bubble in the short term, VNDirect stressed. The market is now different from 2009-10 when inventories were high and prices were inflated, leading to the market collapse in 2013.  

Now, the market has limited supply and high demand while the cash flow continues to be pumped in the market.

Vietnam’s real estate market has a cycle of seven years and the market could enter a strong growth period in 2021 if legal bottlenecks are tackled properly, VNDirect said.

The M&A activities are predicted to be robust next year as a number of small developers have fallen into difficulties due to the legal bottlenecks and impacts of the COVID-19 pandemic, creating opportunities for those with financial capacity./.