Land investment no longer a free ticket to riches

January 21, 2024 | 03:00 pm PT
Land investment no longer a free ticket to riches
Some investors might even consider speculative investment, creating false land booms to deceive less experienced investors. Illustration photo by Freepik
With land prices rising above their true value and demands dwindling, major losses are inevitable for people who invest in land.

Regarding the topic of land investment, I have always held the belief that "people may perish, but land does not" and as time goes by, people only continue to divide land plots further.

Why did land prices increase rapidly in the past? In my opinion, there are two main reasons for this.

Firstly, the increase was to compensate for undervaluation. Initially, land plots were priced too low compared to their potential profitability. Therefore, as society develops, the land has to increase in value to compensate for its low starting prices.

The second reason for the past rapid increase in land prices was the common family size.

In the past, families often had three to four children, and some even had up to ten or more.

This led to an explosive demand for more houses and land plots to accommodate the growing population.

However, the current scenario is different, meaning the escalation in house and land prices is not as steep as before.

After a period of steady increase, land prices have exceeded their actual value, leading to fewer buyers on the market.

This means investing in land no longer guarantees the hefty profits it once did.

Some investors might even consider speculative investment, creating false land booms to deceive less experienced investors.

Modern families are also having fewer children, with many opting to have just one child.

In 20 years, as these children become adults, the pressure to acquire houses and land will be much lower.

Moreover, many young people are now faced with choices about which inherited house to live in since they might get multiple properties from both their maternal and paternal sides.

If the trend of having only one child continues, it is possible that an individual could inherit several properties from their grandparents and parents, leading to Vietnam's high homeownership rates.

Combined with the tradition of leaving houses and land to the next generation and a decreasing birth rate, the demand for housing may be even lower in the future.

Additionally, the government has been actively working to curb inflation and prevent uncontrolled increases in land prices.

It aims to shift investment flows from real estate into other sectors.

Given this context, expecting land investments to yield the high profits of the past seems unrealistic.

Of course, each individual has the right to decide how to use their money, and no one can foresee the future.

Hence, many will continue to invest in land, either until they become wealthy or lose everything.

Real estate prices and investments should be decided by the market.

Regarding whether one should buy property at this moment, my advice is not to make this mistake as real estate prices are expected to continue declining.

The real estate market might only reach its lowest point towards the end of 2025 or the beginning of 2026, coinciding with significant developments in the bond market.

It is important to note that our market often trails behind China's by a year and that market has not reached the bottom yet.

So what is your viewpoint on this matter?

Reader GTT

*This opinion was translated into English by AI. Readers’ views are personal and do not necessarily match VnExpress’ viewpoints.

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