No real estate boom does not mean lower house prices

By hongnhungpaticusi   February 23, 2024 | 03:46 pm PT
No real estate boom does not mean lower house prices
An apartment project to the west of Hanoi. Photo by VnExpress/Ngoc Thanh
Whether or not there's a real estate boom, properties near industrial zones and urban areas will still increase in value.

The era of widespread real estate booms, even in remote and desolate places, will be over. In regions where there is investment for the development of industrial zones and beltways, the real estate market will still see sporadic booms.

If one hopes for the end of the real estate boom so that anyone can afford to buy a plot of land, that would only be possible in remote and desolate areas, not in urban areas. Dream on. The land price is now aligned with the market price, so sellers will use that as a benchmark and raise prices in more advantageous locations.

For example, if you now buy a mid-range apartment for about VND3 billion (US$122,000), and people mistakenly believe the real estate boom is over, will this apartment's price drop to VND2 billion for you to buy?

Major cities, where many job opportunities are at, still attract young populations, so property prices will continue to rise. The future landscape will have two extremes: the rich will continue to buy properties to rent, while the poor, unable to afford homes, will have to resort to renting, unless there's a breakthrough in their income. The best solution is to find ways to increase one's income, rather than hanging onto false hope.

Relying on social housing is impractical, as there is not enough for everyone. This has been proven in developed countries like South Korea, Japan, the U.S., and Canada where abandoned lands continue to be deserted, and areas with expensive land continue to be expensive, without any policy capable of lowering prices for them to be affordable for the middle class.

So, increasing income to afford housing remains a problem for people who want to live in urban areas. After the land law is implemented, more residents may leave the city for the countryside to balance out the population distribution.

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