Will house prices skyrocket in the near future?

Recently, the National Assembly passed the Housing Law, which includes many new regulations. Among them, the Housing Law does not specify a time limit for apartment ownership.

Commenting on this issue, Mr. Giang Hoang Anh, director of a real estate brokerage in Hanoi, stated: Removing the ownership time limit for apartments is necessary to avoid unnecessary anxiety for homebuyers.

There is no stipulated time limit for owning an apartment; will the price increase in the future? (Figure 1) — According to experts, the increase in apartment prices depends on many factors, including the removal of ownership limits for condominiums. (Photo: MPO)

"An apartment or a house is a very significant asset in a person's lifetime, so if there is a regulation on the ownership period of an apartment, many people will feel more like they are renting than owning the house. Not to mention that many people still have the mindset that real estate is inherited property, to be left to their children and grandchildren later. Therefore, I believe that removing this regulation is reasonable," Mr. Hoang Anh said.

Some argue that removing the ownership limit for apartments could cause apartment prices to continue to skyrocket, and Mr. Hoang Anh believes this opinion is partly true.

Elaborating further on this, Mr. Hoang Anh said: Before the new Housing Law was passed, the market had two types of apartment products: apartments with long-term ownership, mostly for 50 years, and apartments with perpetual ownership.

"Comparing these two product lines is quite inappropriate, as it depends on the project and amenities, but if you compare them within the same segment, apartments with perpetual ownership are priced 20% - 30% higher than apartments with limited ownership periods," Mr. Hoang Anh shared.

Therefore, removing the ownership limit for apartments would be a factor contributing to rising housing prices. However, the increase in apartment prices also depends on many other factors, such as land prices, material costs, labor costs, etc.

"The main factor driving up apartment prices recently is the low supply, with demand not meeting supply. If the supply-demand imbalance is resolved, I think apartment prices will be brought under control," Mr. Hoang Anh emphasized.

Meanwhile, Mr. Vu Cuong Quyet, General Director of Dat Xanh Northern Vietnam, believes that apartments with long-term ownership will be more popular. Therefore, removing the regulation on the ownership period of apartments will positively impact the psychology of homebuyers, making this market more vibrant.

Regarding the impact on prices, Mr. Quyet said that many people think that apartments with limited ownership periods are cheaper than apartments with long-term ownership, but if this happens, the difference will not be significant.

"If there is a price reduction, it might only be 5-7%, at most 10%, while other costs remain fixed. Therefore, how much cheaper the price of apartments with limited ownership periods can be depends on how much the State collects in land fees," Mr. Quyet said.

However, according to Mr. Quyet, apartment prices will continue to rise in the coming period due to the large supply-demand imbalance.

"Just looking at the supply and demand in the current market, you'll see that supply is very limited, but demand is high. Demand remains stable, but supply is gradually running out," Mr. Quyet explained.

Regarding the outlook for apartment prices in the coming period, Dr. Nguyen Van Dinh, Chairman of the Vietnam Association of Real Estate Brokers (VARS), believes that the supply of real estate in general, and apartments in particular, is unlikely to see a breakthrough in the near future. Apartments in the affordable, mid-range, and high-end segments will continue to be scarce, making it difficult for prices to decrease, and potentially even leading to increases.

Regarding this issue, Mr. Nguyen Van Dinh predicted that the selling price of primary market apartments in 2024 will continue to increase by an average of 3-8%, with the highest increase seen in luxury apartments.

Source