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Cheaper mortgages and lower prices helping to boost property market in Vietnam

Restrictions on lending were eased by the central bank in February and this is now filtering through to sales. Bui Tan Tai, deputy general director of Asia Commercial Bank, said it is receiving 30 to 40 applications for property loans every day, mostly in Ho Chi Minh City.

In April the number of applications increased 20% month-on-month and mortgage amounts rose 15%, he added.

Bankers said the number of actual buyers has jumped since speculators are staying on the sidelines, thanks to the low liquidity in the real estate market. The fact that they can now borrow up to 90% of the value of a property compared with 70% before has also helped.

Apartment prices in Hanoi and HCMC dropped as much as 40% in the first quarter, according to real estate services firm CB Richard Ellis. .

Nguyen Hong Son, deputy general director of Navibank, said it is also seeing the number of mortgage customers increasing and his bank expects a further rise, especially from among low-income earners.

This is in response to property developers moving away from luxury, high end projects to more affordable properties as this is where the future demand is expected.

Corporation and Vietnam Construction and Import Export Corporation said in March they have invested or are ready to start investing in the low-priced property segment, banking on the housing needs of a large number of low-income earners.

With the luxury housing market in near-hibernation since mid-2008 due to tight monetary policies issued to contain inflation, analysts say several real estate companies have shifted their focus to moderately-priced homes.

'We have contacted some low-income housing investors and are waiting for them to come up with plans,' Son said.