The dynamics of house price in Vietnam

ABSTRACT

We have assessed the housing market of Vietnam, with particular apartment prices in 10 urban districts of Hanoi, the capital of Vietnam. Significant determinants of house price include construction cost, income per capita, urban rent expense, and lending rate. Our findings show statistically significant and dynamic determinant effects on the apartment prices of 10 urban districts of Ha Noi. There are signs of volatility clustering in the GARCH effect at nine districts’ apartment prices, all with magnified effects. Amongst the ordinary least square (OLS), robust least squares (RLS) and bootstrap technique, RLS presents more significant fundamentals with higher Rs squared than the OLS and bootstrap on individual districts and overall Hanoi apartment prices. We find signs of price bubbles in the first quarter of 2015. While this quantitative analysis is limited to the north of Vietnam, the findings also provide insights into other significant centres of Vietnam. It also provides a basis for apartment price forecasts to the stakeholders in the housing market of Vietnam, investment decision-making and portfolio management for both household investors and mortgage investors. The study outcomes can be used to forecast the volatility dynamics of the expanded types of dwellings.

KEYWORDS:

• House price dynamics
• Hanoi
• Vietnam
• volatility cluster
• robust least square
• bootstrap

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. Although not presented here, statistics figures, particularly Ha Noi income per person, support this norm.

2. Our test shows Obs*R-squared < Prob Chi-Squared. This is evident in the insignificance of the LM test.