A 120 trillion VND (5.08 billion USD) package in preferential lending rates for social housing developments started to see first disbursement, a positive signal after the development of affordable homes had been in stagnation partly due to a shortage of capital for several years.

According to the Governor of the State Bank of Vietnam Nguyen Thi Hong, the central bank as of July had received three documents of Bac Giang, Tra Vinh and Tay Ninh regarding 15 social housing projects in these provinces, five of which were licensed with construction permits.

Besides, three provinces including Binh Dinh, Phu Tho and Ba Ria – Vung Tau announced nine social housing projects recently.

Hong said that the Bank for Investment and Development of Vietnam (BIDV) and the Vietnam Bank for Agriculture and Rural Development (Agribank) have started to disburse the package.

Specifically, BIDV will provide a loan worth 95 billion VND for a social housing project in Viet Tri city, Phu Tho province, and issue a guarantee worth 4 billion VND for the sale of off-the-plan houses.

Updates from the central bank showed that credit in the real estate business expanded by 14% in the first five months of this year, reflecting that solutions to remove difficulties for the property market started to work.

However, credit for real estate purchases saw a slight drop of 1.32%, compared to 15% in the same period last year.

Hong said that removing legal bottlenecks and adjusting housing prices were among the measures to promote demand for real estate products, adding that home-buyers were still hesitant to buy houses at the moment because of higher housing prices.

According to the Ministry of Construction, some 21 social housing projects, including for workers and renovation of old apartment buildings with a total of 20,000 apartments were eligible for the 120 trillion VND package. These projects had a total investment of more than 20 trillion VND and had a demand for borrowing around 7 trillion VND from the support package.

The construction ministry also asked 22 localities which had a high demand for affordable homes to report on loan demand and difficulties they met while implementing this support package.

In the first six months of this year, nine social housing projects and housing projects for workers with nearly 18,800 apartments began construction.

The 120 trillion VND support package was first implemented in April which aimed to provide loans with rates 1.5 – 2% lower than the medium and long–term lending rates in the market to developers of social housing projects and home buyers, following the Government’s Resolution No 33/NQ-CP dated March 11 regarding solutions to remove difficulties and promote the safe, healthy and sustainable development of the market.

Four State-owned commercial banks will join in the disbursement of the package which will run until 2030.

Vietnam aims to develop at least one million affordable housing units by 2030./.