A Change of Guard

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Wednesday 4 April 2012

Leaping for loans: Young Cambodia on a budget [buying a home is beyond the reach of Cambodian youngsters]


Vannak Oum and Banung Ou
Wednesday, 04 April 2012
Phnom Penh Post

How long will it take for me to save in order to own property?” has become a common question for young Cambodian couples looking to move in together, as housing prices rise across Phnom Penh.

Phann Chandara, a trainer at the International Centre for Conciliation, expressed his concern when approached with this question.

“My salary is about US$300 per month, so it’s impossible for me to be able to buy a house,” he said.

The 25-year old continued: “Of course it would require a lot of financial support from different parties, like my family and or the government.”

According to statistics released by the Ministry of Economics and Finance, Cambodia’s economy is growing at about six to seven per cent year-on-year. This rate is considered high when compared with other countries.

On the other hand, Cambodia faces many problems regarding economic growth. Challenges include the widening gap between rich and poor, low wages, increasing price of goods, and high unemployment rates – all of which are unresolved issues.

These challenges are enormous barriers for the future of young Cambodians looking to prosper in the new economy by owning their own property.

Cambodia’s bank sector is developing rapidly to satisfy people’s needs when facing these problems.

Oum Chan Mony, an information provider at ANZ Royal Bank, said that giving out loans to buy property is now on a special promotion: if customers are purchasing a home between $50,000 and $100,000, the bank will provide 60% of the loan upfront and the customer has the option of paying back the money in instalments spaced out over a span of 20 years.

Although it sounds good, there are specific requirements to qualify.

“Before customers can qualify for the loan, they must earn at least $850 per month, they will have to leave their passbook in the bank, and will have to pay 20% of their gross salary monthly,” Oum Chan Mony explained.

While ANZ’s offer seems efficient, the bank rate is considerably high and those who make an average salary don’t qualify. Actually, take this example: if you take out a loan of $30,000 to buy a property at a rate of 10%, and need to pay it back over 20 years, a short calculation shows that you will end up paying the bank $60,000.

That’s double the original loan.
According to Dith Channa, an experienced realtor and general manager of VMC Real Estate, “It is obvious that it is quite hard for our youth to own a house own their own.”

Dr Beng Hong Socheat Khemro, Deputy General Secretary of Council for Land Policy at the Ministry of Land Management Urban Planning & Construction, said: “Actually, it is not only our youth that lacks the prospect of buying houses – but also all over the world. For instance, in Norway, where I have been, if youth want to move out from their parents’ houses, normally they are supposed to rent the places.”

He also confirmed that our government is taking the case of Residential National Policy into consideration; and in theory, youth should learn the value of saving if they want to own their property.

4 comments:

Anonymous said...

That's the way it is you have to pay for what you're borrow plus interest. I purchase my house for 225 thousand after 25 years total pay off over half of million.

Anonymous said...

Don't ties the rope to the tree and hang your neck and hopping that you're survive when jumping down,Cambodian's dream of owning a house can not come reality.Here why,your country is full of corruptions,the laws are in the books no one enforce the laws to protect consumer if your don't have cronies that related to Hun Yuon si Khmer guy,also your income is uncerty what if you lost your job you will lost everythings,on the other hand let just said you paid all your loan,on your last payment the landlord refuse to give your title or deed to your property,who are you going to ask for help if the laws did not protects consumer like you?...something to think about when you live a corrupted Cpp govt...ok?

Anonymous said...

My fellow khmers!
Owning a home in today corrupted society like Cambodia is only a dream,especially when your last name ain't "Hun" I remembered while back reading story about Piseth pelikah from La'express French reporter about the villa that Hun sen baught for her cost 180,000 dollars (us) the day before she was killed Hok lundy told her to get the country but she refused a week later she got killed and the house instead of giving to her offspring the bank took it back,this is why I said no one protect you,its a give from her lover Hun sen, the house should belong to her regardless of what,whether she death or alive.Lets talk about owning a house that cost like 40,000 dollars for any reason the bank can take it back just like pelikah's villa.think about it folks! no laws to protect consumer like you.

Anonymous said...

The picture above dose not look like in Cambodia and the people look like Chinese.