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Leaping for loans: Young Cambodia on a budget


"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.

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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.

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