Instanced housing would be great, but at this point I doubt it would be implemented. Too much has been invested into the current system. Replacing it would cause massive complaints among those who already own houses and it would definitely require an expansion or something to put it in place. I doubt it would happen during a regular patch cycle.

ESO did a good job with housing. Instanced, but still visible in game and you could actually buy some from the cash shop if you didn't want to farm for gold. Now if they only had a better AH system.