A credit crunch has brought the local property market to a standstill.
Many homebuyers say they thought they had secured mortgages from banks only to be refused at the last minute. Meanwhile, lenders cited a government order to cut credit for the non-production sector as the reason for the denial.
A man known only as Vinh told Tuoi Tre newspaper that when he bought an apartment in Ho Chi Minh City's Binh Tan District, two years ago, he signed a mortgage contract with a bank to help finance the purchase in installments.
Vinh now says it's no longer easy to have the loan disbursed. Besides, interest rates have reached a whopping 25.25 percent, compared to home loan rates of around 12.75 perecent two years ago.
Many other homebuyers said they had been flatly turned down by banks.
Without access to loans to complete their payments, some new buyers have been forced to sell.
The situation is even worse for project developers: they cannot find buyers for their housing stock and, at the same time, have to halt new projects due to credit difficulties.
Even large real estate companies like Hoa Binh, Lilama SHB and Hoang Anh Gia Lai are caught up in this tough situation, Tuoi Tre reported. Hoang Anh Gia Lai, for instance, now has nearly VND3 trillion (US$146.2 million) worth of housing products awaiting customers.
A developer said real estate companies are desperate for cash. They have offered various perks to attract buyers and even lowered prices, to no avail.
The State Bank of Vietnam is trying to keep credit growth below 20 percent this year in an attempt to control inflation, which stood at nearly 20 percent in May.
Commercial banks have been ordered to cut back on lending to the non-production sector, which includes the stock and real estate markets. The goal is to limit credit in this sector to 16 percent by the end of the year.
An anonymous banker said it would be very difficult to achieve this target, at least for his bank.
He said non-production loans account for 40 percent of the total credit at his bank and most of them are long-term real estate loans that were brokered prior to 2011.
Many banks have since tried to discourage new clients with high interest rates. However, unless they can recoup their outstanding loans, he said, they'll have a hard time meeting the credit growth target set by the central bank.