Foreign housing policy speculation inflates HCMC property bubble


Experts have urged property investors to be cautious as those expecting to cash in once foreigners are allowed to buy land might be betting on an empty tip.

With foreigners expected to be allowed to buy houses in Vietnam in the near-future, HCMC property dealers have begun to up their prices.

Investors have been swallowing the high prices as they expect to re-sell the properties to foreigners at even higher rates later.

But as would-be future policies of foreign buying are unclear, such investors might be fishing for a red herring.

The momentum behind those who want to buy and then sell expensive property to foreigners has set off a rise in HCMC land plot prices, especially in district’s 2, 7 and Nha Be, that may not last.

These areas have seen the land plot prices surge up to VND1 million (US$62.5) per sq.m per day, Thanh Nien found.

A land plot sold by Van Phat Hung real estate company fetched at least VND 7.6 million ($468) per sq.m, up from its recent VND5 million offer.

Other land plots were sold for more than VND8 million per sq.m, said company sales manager Tran Thu Hong.

She attributed the price increase to tremendous demand, adding that prices on many properties rise everyday.

Thanh Nien also found that several of Van Phat Hung’s prices near the Phu My bridge project in district 7 have also risen to VND35 million ($2,150) per sq.m from VND10 million several months ago.

Some prices had surged by up to VND10 million per sq.m in just the last two weeks, according to the company.

Nam Long firm has also jumped on the bandwagon as land plots in a district 7 project have increased by VND5 million ($312) per sq.m over last March, when the property boom began.

The firm also confirmed that its prices were jumping in district 2 as well.

Several customers have been frustrated with local property firm that have backed out of several deals in order to sell for higher prices.

Fishing in troubled waters

But economic experts have warned that those who buy these inflated land plots hoping to resell to foreigners could catch a back draft as there is no clear policy on foreign buying yet.

All pertaining to foreign land ownership is vague and speculative at this point, with some experts saying that even if foreigners are allowed to buy property, they may be prohibited from owning land.

And such housing policies wouldn’t take place until next year at the soonest.

Vo Dinh Quoc, vice CEO of ACB property firm, also said that the real increase in land prices was not widespread and focused on very specific projects in the city.

Last March, HCMC witnessed a sizzling real estate fever as property prices in new urban areas skyrocketed.

But experts then forecast the bubble would burst as it was set off by speculative pressure and not the true demand-supply gap.

The sharp surge in property prices was attributed to investors that had made a killing on the then-booming stock market and were using those profits to buy property.

After the boom ended, property speculators felt the pinch of property price declines.

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