Ho Chi Minh City: Housing Development Fund stopped lending because of running out of capital

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The Ho Chi Minh City Housing Development Fund (HOF) has just asked the People’s Committee of Ho Chi Minh City to remove difficulties in financing low-income people to buy houses in the face of the risk of capital exhaustion.

Housing development fund stopped lending because of running out of capital.

Home lending has been stopped

Specifically, according to the plan for 2021, the Ho Chi Minh City Housing Development Fund (HOF) is assigned a target of VND 470 billion disbursed for low-income people wishing to buy a home. However, by the end of quarter 1/2021, this unit only disbursed VND 96.64 billion, reaching 20.56% of the plan.

To achieve the disbursement target of 470 billion VND this year, HOF has registered and approved by the People’s Council of Ho Chi Minh City to supplement charter capital of 374 billion VND. On that basis, the People’s Committee of Ho Chi Minh City assigned the Department of Planning and Investment and the Department of Finance to advise the additional charter capital grant to HOF.

Mr. Nguyen Ngoc Thach, Director of HOF, said: “While waiting for funding, the unit has temporarily used the remaining temporary funds to solve the need for a home loan for low-income people. By the end of the first quarter, the unit still lacked VND 166 billion in housing loans. The capital shortage last year was 70.2 billion dong ”.

“Without additional capital, not only the support for low-income people to get loans to make houses difficult, but many other activities of the unit will also be affected. Some HOF activities in May or June this year are at risk of being suspended due to lack of capital. Therefore, HOF petitioned the People’s Committee of Ho Chi Minh City to soon remove the above difficulties ”, Mr. Thach added.

Operating since 2005, up to now, HOF has supported more than 5,400 low-income cases for housing construction loans with a total disbursement of more than 2,500 billion VND, contributing to the implementation of the city’s social security goals.

HOF has an initial charter capital of VND 1,000 billion, operating on the principle of payback, offsetting costs incurred in the operation process and not for profit.

The Fund performs the tasks assigned by the People’s Committee of Ho Chi Minh City in housing development in the city, organizes the implementation of financial support policies for low-income beneficiaries to borrow housing.

Affordable housing: increasingly out of reach

According to the project to build housing development program in Ho Chi Minh City for the period of 2021-2030, only 20% of workers can afford to buy commercial housing in mid-end or higher segment; 40% of the workers can only afford to buy low-cost commercial housing, the remaining 40% cannot afford housing.

The demand for housing of the labor force is mainly in the low-cost commercial segment, while the housing supply is now mainly in the mid-end segment.

The survey results on the affordability to buy houses of the low-income group in Ho Chi Minh City in 2019 showed that 44% of low-income households can afford to pay less than 500 million VND to buy a house; 45% of low-income households can afford to pay from 500 million to 1 billion for the purchase of a house. Thus, up to 89% of low-income groups can afford to pay less than 1 billion VND for a house / apartment.

Although Ho Chi Minh City has issued a number of preferential and supportive policies, the new market only meets a significant amount of housing (less than VND 1 billion) by some small and micro investors, individual business households, leading to the investment scale and the level of comfort that has not met the majority of people’s needs.

It is forecasted that in the coming time, housing demand will continue to increase, the structure of housing demand will focus on the segment of low-cost commercial housing, social housing to serve low-income or unstable workers.

Mr. Huynh Thanh Khiet, Deputy Director of Ho Chi Minh City Department of Construction, said: “Recently, ho Chi Minh City Department of Construction has been looking for solutions in materials and technologies for building low-cost, environmentally friendly housing, adapting to climate change; on new and modern construction technologies, shortening time and lowering product costs; modern construction technology is easily accessible and implemented”.

Accordingly, housing for low-income people does not mean low-quality housing, but must ensure adequate utilities for people to use. On the other hand, construction technology needs to meet 5 factors: fast, cheap, durable, accessible and smart.

In general, the current housing problem for low-income people is very difficult and has not been solved yet. In addition to meeting the 5 factors mentioned above, the most important issue is still the price. With great demand, but Ho Chi Minh City almost lacks grade C apartments (affordable apartments), especially apartments under 1 billion are even scarce.

In addition, the lack of capital for low-income people to borrow houses to buy houses has made the poor’s dream of owning a house more and more distant.

Source: ndh.vn – Translated by fintel.vn