What Happened To Prices After The Last Financial Crisis?

[Mike45]

I am considering buying or building in Thailand. From what I have read some people are of the opinion that all is well in Thailand, so buy now...don't wait because prices will only go up. While others are of the opinion that the crash is near, so delay buying until the prices tumble and scoop up your deal at a much lower price.

I am of the opinion that no one can predict a future (financial , economic) crash.

But I would like to know what happened the last time there was one. Did the condo and house prices come tumbling down? Just stay depressed and steady for a long time? Possibly continue to go up?

Thanks

[AmericanGuy1066]

I am considering buying or building in Thailand. From what I have read some people are of the opinion that all is well in Thailand, so buy now...don't wait because prices will only go up. While others are of the opinion that the crash is near, so delay buying until the prices tumble and scoop up your deal at a much lower price.

I am of the opinion that no one can predict a future (financial , economic) crash.

But I would like to know what happened the last time there was one. Did the condo and house prices come tumbling down? Just stay depressed and steady for a long time? Possibly continue to go up?

Thanks

Prices went down..... and then up again. If you're buying for a quick profit in property that's highly risky, particularly at the moment. 20 years from now prices will be higher. In equities I can tell you some of the biggest rises come not long after the biggest falls and vice versa. For properties the gap is usually wider, but will always be difficult to time. Long term trend for both is upwards tho', so I wouldn't worry too much unless you're speculating - in which case you should be enjoying the thrill of the ride instead of where you're atually going. My view: not the best time to buy, but not the worst either.

Edited August 20, 2007 by AmericanGuy1066

[londonthai]

of cource buy or build if you are going to stay there - better than renting from somebody.

but if it's an investment than probably not the best time

[dee123]

I would imagine now is a buyers market.

[Mike45]

I am considering buying or building in Thailand. From what I have read some people are of the opinion that all is well in Thailand, so buy now...don't wait because prices will only go up. While others are of the opinion that the crash is near, so delay buying until the prices tumble and scoop up your deal at a much lower price.

I am of the opinion that no one can predict a future (financial , economic) crash.

But I would like to know what happened the last time there was one. Did the condo and house prices come tumbling down? Just stay depressed and steady for a long time? Possibly continue to go up?

Thanks

Prices went down..... and then up again. If you're buying for a quick profit in property that's highly risky, particularly at the moment. 20 years from now prices will be higher. In equities I can tell you some of the biggest rises come not long after the biggest falls and vice versa. For properties the gap is usually wider, but will always be difficult to time. Long term trend for both is upwards tho', so I wouldn't worry too much unless you're speculating - in which case you should be enjoying the thrill of the ride instead of where you're atually going. My view: not the best time to buy, but not the worst either.

I will not be buying as a short term investment. I will be buying to live in hopefully for a long time but I would like to be in the position of being able to sell if I needed to.

[philliphn]

What will you be buying or building?

Are you married to a Thai?

"Farangs" cannot own land in Thailand!

You can only essentially get a 30 year lease on a house.

There are also some rumblings about not allowing "Farangs" to be owners of buildings for rent. Keep in mind you don't own the land and after 30 years the Thai land owner is likely to say get out. Then they can sell the assett once again and make more money.

Don't buy a house in Thailand.

The Company route of home ownership is worthless!

Edited August 20, 2007 by philliphn

[Irene]

But I would like to know what happened the last time there was one. Did the condo and house prices come tumbling down? Just stay depressed and steady for a long time? Possibly continue to go up?

Thanks

After the 1997 crisis, there was not much dealing on property transactions for a few years. Mostly, those buildings and housing development in progress were stopped because of lack of fund and those for sale whatever the price demanded were not met with much interest because there was no source of funds to support purchases. It started to have a market in 2000 when the bankers were forced to liquidate their non-performance loans that the collaterals to the loans, such as condos, came into the market. By then, the price has not come down that much. So, do not expect the marketing of condos will be the same as stock market where there is a ready market of buying and selling. The property market here is imperfect without much mechanism to bring out the willing buyers and willing sellers.

To answer your question, the market after the crisis would remain in a vacuum and become steadier later on and rise again when the economy starts to pick up. Why should it be this way? The answer lies in the long legal process that favours debtors not to pay their debts quickly.

[Gary A]

I would guess that existing condos will continue to go up in price. The more upscale older units available within the 49 percent foreigner portion are still available for around 40,000 baht per square meter. The complexes being built now may or may not EVER be completed and many sell at 80,000 baht per square meter and up. I would NEVER buy pre construction, PERIOD! If you are going to buy a condo with the idea of living in it and not for resale, you should be quite safe. Since the price of new units is about double the price of existing units, I would guess you would have no problem selling if you had to.

As has been mentioned, you CANNOT own a house and as far as I know, a thirty year lease has very little resale value. People will tell you that you CAN own a house but not the land. True, but what if you want to sell the house? Buy a nice condo and sleep well at night.

[AmericanGuy1066]

I will not be buying as a short term investment. I will be buying to live in hopefully for a long time but I would like to be in the position of being able to sell if I needed to.

The property market is more illiquid than the equity market. If you think there's a likely "need" to sell then you need to consider what alternatives you have to raise money if you can't sell. If you don't have any alternatives it's maybe not for you. If it's more a case of "sell if you wanted to", i.e "would like to sell but not necessary if you can't tempoarily", then given your longer time frame shoul be OK.

[quiksilva]

I had the dubious pleasure of working in the industry in 1997, and the residential sector at that time enjoyed stable rents and prices and increased occupancies.

This phenomenon was due to the fact that many Expats enjoyed US $ housing allowances, which meant that those fortunate to have such things were in many cases able to move into a better class of residence. Of course today US$ housing allowances are very, very rare...

As someone else mentioned transactions were few and far between. There was no shortage of bargain hunters but no one willing to sell for a pittance.

Edited August 21, 2007 by quiksilva

[ya5702]

The more upscale older units available within the 49 percent foreigner portion are still available for around 40,000 baht per square meter.

Hi Gary

Which are the upscale older condos, please. Name five buidlings you would consider upscale older units (Freehold, that is). Thank you.

[philliphn]

1. Nirun.

2. Ban Sau Lanana.

3. Majestic.

4. Sombat.

5. The Spanish.

What do you mean by upscale?

[Gary A]

By upscale, I mean a walled complex with good gated security and well maintained landscaped grounds. Large spotless clean swimming pools, adequate parking and well managed. I'm NOT talking about high rise shoe boxes. I have a 60 square meter unit in Ban Suan Lalana. The condo units there are five stories high built in a rectangle with an open garden in the center so no fire hazard. Wide stairs going to the top and no rickety steel fire escapes that you need to be an athlete to go down. In fact I really don't like most condo developments, but I like Lalana. The units that come available sell for around 35,000 to 40,000 baht per square meter.

Added - Maintenance fee is 10 baht per square meter per month. Electric is billed directly from the electric company. We have never run out of water.

Edited August 22, 2007 by Gary A

[think_too_mut]

But I would like to know what happened the last time there was one. Did the condo and house prices come tumbling down? Just stay depressed and steady for a long time? Possibly continue to go up?

Interesting, nobody mentioned what happened and what helped avert a total disaster.

Prior to 1997. crisis foreigners could not own condos. Same as with land then and today.

To clear the log jam of condos oversupply, the law that foreigners can own units in their own name up to 49% of total building area was passed and is still in effect.

If that happens again, they may reach for that law and remove the 49% cap. But other measures (abolishment of 1 yr extendable visa for condo owners, removal/tightening of company ownership) point that Thais don't want more foreigners in their country.

[donx]

But I would like to know what happened the last time there was one. Did the condo and house prices come tumbling down? Just stay depressed and steady for a long time? Possibly continue to go up?

Interesting, nobody mentioned what happened and what helped avert a total disaster.

Prior to 1997. crisis foreigners could not own condos. Same as with land then and today.

To clear the log jam of condos oversupply, the law that foreigners can own units in their own name up to 49% of total building area was passed and is still in effect.

If that happens again, they may reach for that law and remove the 49% cap. But other measures (abolishment of 1 yr extendable visa for condo owners, removal/tightening of company ownership) point that Thais don't want more foreigners in their country.

You may be right, but that is not how I remember seeing what happened to the condo ownership laws. If I remember correctly (which is not very likely) foreigners were able to own up to 49% of total building area before the 1997 crisis. When this was first allowed I don't recall. What I remember happening was that some condo buildings were allowed to have 100% foreign ownership of some Bangkok condo building to help with the back log. This was a temporary change which has since been rescinded.

I'll wait for the real estate law experts to tell me how wrong I am. By the way, it wasn't too long ago since Thai wifes of foreigners weren't allowed to purchase land. I think this was changed in the late 1990's. I remember meeting an expat in 1995 working at Thaicom Shinawatra Satellite who had a bungalow owned by his brother-in-law since neither he nor his Thai wife could own it.

[donx]

Doing a google seach of "thailand condo ownership laws" yielded these interesting links:

link1

link2

link3

From what I read, condo ownership for foreigners has been allowed since at least 1990.

[quiksilva]

But I would like to know what happened the last time there was one. Did the condo and house prices come tumbling down? Just stay depressed and steady for a long time? Possibly continue to go up?

Interesting, nobody mentioned what happened and what helped avert a total disaster.

Prior to 1997. crisis foreigners could not own condos. Same as with land then and today.

To clear the log jam of condos oversupply, the law that foreigners can own units in their own name up to 49% of total building area was passed and is still in effect.

If that happens again, they may reach for that law and remove the 49% cap. But other measures (abolishment of 1 yr extendable visa for condo owners, removal/tightening of company ownership) point that Thais don't want more foreigners in their country.

You may be right, but that is not how I remember seeing what happened to the condo ownership laws. If I remember correctly (which is not very likely) foreigners were able to own up to 49% of total building area before the 1997 crisis. When this was first allowed I don't recall. What I remember happening was that some condo buildings were allowed to have 100% foreign ownership of some Bangkok condo building to help with the back log. This was a temporary change which has since been rescinded.

Correct, there was a brief window for 100% foreign ownership of condominium projects that opened up in 1998. This was aimed at stimulating the real estate market but actually did very little.