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Property prices to increase 5-10%

Released at: 15:51, 19/01/2016

Property prices to increase 5-10%

VNREA predicts higher prices due to economic and market factors.

by Ngoc Chi

In its report on the real estate market in 2015 released on January 18 the Vietnam National Real Estate Association (VNREA) predicted that property prices would increase 5 to 10 per cent this year.

VNREA believes the impact of the economy along with the return of investors to the market will see the market maintain its stable development and be more vibrant than in 2015. The recovery will result in prices being continually adjusted, with a rise in the vicinity of 5 to 10 per cent expected in the near future.

Mr. Tran Ngoc Quang, General Secretary of VNREA, said Vietnam’s economy is entering a new growth cycle with good indicators, such as GDP growth forecast at about 6.5 to 7 per cent, inflation remaining below 5 per cent, and credit activities to be solid throughout the year.

Together with the effects of the Law on Real Estate Business and the amended Law on Housing, the State Bank of Vietnam (SBV) raising interest rates will also add heat to the property market. A positive for the property market in 2015-2016 will be the development of infrastructure, and at the same time the effectiveness of the SBV’s monetary policy will create sustainable macro-economic development over the long term, VNREA believes. 

Long-term risks, however, include the budget deficit and exchange rate issues. The latter remains a factor of some concern and there is likely to be two or three devaluations this year.

VNREA also sees the mid-range segment dominating the market this year. The lower-price segment will continue to grow but it will not see significant transaction numbers for much longer due to its dependence on government assistance.

Villas and townhouses will continue to see positive changes to meet the significant demand in the market this year as most Vietnamese people prefer to have a landed house rather than an apartment. The segment will also benefit from the considerable improvements in infrastructure and more favorable connections to city centers.

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