Gloomy Days Ahead For Asia's Housing Markets

[bingobongo]

inflation sure is powerful but then reality sets in and the denial can no longer mask reality, dont get emotionally involved with 4 walls and plaster

anyway, to the dreamers (aka homedebtors) and realists, holding wheat, gold and oil (which are all easier to sell investments (unlike overbuilt Thai housing)) would have given you a better rate of return.....

oversupply of housing ....check

poor construction of housing....check

property loan defaults rising....check

loose property lending standards.....check

out of contol inflation.....check

builder complaints rising.....check

BOT holding rates steady and more likely to raise rates to stem inflation (rather than cut)......check

Gloomy Days Ahead for Asia's Housing Markets

Wheat was up 160% in March 2008 on a year earlier; soy bean oil by 104%, corn by 37%, and sugar by 26%.

The housing markets most likely to be affected by monetary tightening seem to be China, India, Singapore, Philippines and Thailand, which have experienced the largest increases in inflation.

http://theseoultimes.com/ST/?url=/ST/db/read.php?idx=6482

Edited April 20, 2008 by bingobongo

[YoungFarang13]

property loan defaults rising....check

link?

loose property lending standards.....check

link?

also, can someone tell me why rice has doubled in price over a year? I understand why food has gone up, but doubled? Why?

[palm]

inflation sure is powerful but then reality sets in and the denial can no longer mask reality, dont get emotionally involved with 4 walls and plaster

anyway, to the dreamers (aka homedebtors) and realists, holding wheat, gold and oil (which are all easier to sell investments (unlike overbuilt Thai housing)) would have given you a better rate of return.....

oversupply of housing ....check

poor construction of housing....check

property loan defaults rising....check

loose property lending standards.....check

out of contol inflation.....check

builder complaints rising.....check

BOT holding rates steady and more likely to raise rates to stem inflation (rather than cut)......check

Gloomy Days Ahead for Asia's Housing Markets

Wheat was up 160% in March 2008 on a year earlier; soy bean oil by 104%, corn by 37%, and sugar by 26%.

The housing markets most likely to be affected by monetary tightening seem to be China, India, Singapore, Philippines and Thailand, which have experienced the largest increases in inflation.

http://theseoultimes.com/ST/?url=/ST/db/read.php?idx=6482

It's very clear from your constant anti-Thailand rants that you view buying a house or condo in Thailand as an investment? If that's truly the case, your finances must really be in terrible shape.

Maybe if you were a bit smarter you'd have enough money to just buy properties that take your fancy with cash, instead of whining like a bitter foreigner in every post you make.

[Naam]

can somebody answer my simple question "who is interested what the housing market does in Asia?"

[london]

Naam, Palm, Young Farang,...hear hear!!

But lets be kind to Bingo..........lets just either agree with him (verging on impossible for me) or just not bother to comment any more.

After all, he has a unique position of being 100% wrong with his oh so many his earlier predictions!

[backflip]

As the anti-Thai postings indicate: there's a difference in an opinion that is based on KNOWLEDGE, and an opinion that is based on IGNORANCE, and their blatherings fall distinctly in the latter group.

I love it when they complain about the price of a newly offered condo ("oh my God, no place in BKK/Pattaya is worth 120,000THB/sqm"), and they don't realize that the offering is for a unit that won't be available for 4-5 years!

[thaigene2]

property loan defaults rising....check

link?

loose property lending standards.....check

link?

also, can someone tell me why rice has doubled in price over a year? I understand why food has gone up, but doubled? Why?

So let's see, you are skeptical of claims that housing/condos are way overpriced, but then you question why rice is overpriced? So that means you see logic in Thai house/cond price inflation but not rice? It's called hyper-hysteria my friend. And it's all nonsense..directed at people whio can't figure it out. Just like oil - and inflation in general. Talk up the market and real or perceived shortfalls, and bingo! (or I guess bingbongo in this thread)..higher prices! Ever wonder who gains? You think the rice sellers are wringing their hands in dread over these developments?

Ever wonder whether there was a coincidence that Dick Cheney and his puppet were occupying the White House during the highest oil price hikes in history? Every wonder who gained? Think the oil companies are 'worried' about declining stockpiles? Nope they're raking in the cash and brainwashing you with long commercials on CNN and BBC about how they are touchy-feely 'energy stewards'. It amazes me how easy it is to fool people - anyway..

Look at the recent US inflation records and what do you see? Republican presidents Reagan, Bush Snr. and the present junior-puppet himself (and puppet master Cheney).

Edited April 21, 2008 by thaigene2

[highdiver]

once there was a man who invested in BKK in a condo....

at the end of 2006 he sold the condo feeling he made a strike and he should get out of the market and put his money safely in the "west"

however since that date the market has gone up so much that this guy is feeling a bit .....well you know.

So since then he makes it a point to post only negative things about the market. and warnings about the real estate market going down.

but.... it seems the market is still going up and more and more projects are in progress.... as for the money safely in the "west" well we all know what happened there don't we???

in thailand we say "Som nam na!!!!

[wpcoe]

There is always the potential for conflict between general trends and specific situations.

Against the common advice to rent and not buy, a little over three years ago I was looking for a rental in Pattaya and found a small (76 sq meter) 2-bedroom condo in the Jomtien (Pattaya) area for sale for B1.3 million which I impulsively bought (in my own name as a foreigner.)

In my case, it has worked out pretty well, as the rental for a similar unit would be about B15,000-B20,000 and overall I'm happy with my unit, especially now that they've hooked us up to the municipal water main and have painted the exterior of the building, sprucing it up a bit. If I stay here another five years, and then just walk away from the unit, I still will have saved significant money over renting. Chances are, though, that I would recover at least some of my original investment at that time as an added bonus.

Additionally, I have benefited from falling US$ exchange rates as my income is in US$ from overseas. A B20,000 rental would have increased by over US$100/month based on the 16% drop in the USD-THB exchange rate in the past three years. (I transferred the cash to buy my condo at B37, and currently the exchange rate is about B31.)

That's a specific situation, and were I to repeatedly tout it on a message board, it could give the image that the overall market favored buying versus renting. Chicken Littles can squawk gloom and doom about the market, and Happy Campers like me can coo about the opposite, but objectivity in one's own situation is more important.

The bottom line, like with so many things in life, is that YMMV (your mileage may vary). Your personal situation (job, family, savings, etc) affects how you will relate to and interact with the market. If you bought your dream house (or condo) and it didn't decimate your finances and/or ruin your lifestyle, who cares if there is an oversupply of housing, other people are defaulting on their loans, other places seem overpriced or poorly built, etc? Does it matter if the resale price of your unit goes up or down, if it is your primary residence and you are happy?

[thaigene2]

once there was a man who invested in BKK in a condo....

at the end of 2006 he sold the condo feeling he made a strike and he should get out of the market and put his money safely in the "west"

however since that date the market has gone up so much that this guy is feeling a bit .....well you know.

So since then he makes it a point to post only negative things about the market. and warnings about the real estate market going down.

but.... it seems the market is still going up and more and more projects are in progress.... as for the money safely in the "west" well we all know what happened there don't we???

in thailand we say "Som nam na!!!!

Is the US $ the only 'western' currency? Only if you're a myopic American I guess..

[YoungFarang13]

i did not say i thought rice was over priced, i asked why it has gone up so more than other products. i believe there is an answer to that question as pricing is not arbitrary.

and i just asked for links. you dont have any?

[LoveDaBlues]

I bought my motorcycle because I enjoy riding it; not as an investment.

When I build my house it will be because I want to live in a place designed by me; not as an investment.

Why is that so hard for some people to understand?

[BEENTHEREDONETHAT]

OK so you decide not to buy property and rent . Now there is no question that inflation is going wild most everywhere, so what do you suppose is going to happen to rent prices? If you buy you don't have that worry. Rent and in a few years you may have to move in with friends or relatives to afford to live here.

[LivinLOS]

Sorry but thats a totally myopic view.. Same As I pointed out using my own hard number of the last few years to back it up in another thread.

Firstly when inflation wages so do wages, a median home is to be afforded by a median income person.. over time (small blips like the last 5 years and bubbles greenspans easy credit notwithstanding.. Dont worry we will see enough of a house price crash to revert to the mean)... So wages will still pay rents simple.

Secondly you totally overlook the loss of return on tied up assets.. My last home rented for under 3% of its market value.. My own assets made >30% per annum.. Even an normal investor getting a bare 10% would make 3x to cost of renting from the same amount of tied up illiquid assets in a 3rd world market with little hope of getting out easily. And I should point out that the 3% he got was before he maintained it.. Which probably amounted to 10% in direct maintenance costs and then he lost taxes on the remainder !!!

I have just moved house as my old one was destroyed totally, so the owner lost all 25 million baht, not the return on his asset, but the entire asset !! My new house again is about 3%.. Why would anyone tie up thier money in an investment when the use of that assets costs 3x less when you dont need to own it ?? Also Thai homes are not built to last, the foundations are weak, the build quality is poor, its a case of rebuild it every 20 years or so as it is a deteriorating asset !!

The only reason to own a home here is because it s where you want to get old and live forever, the idea of buying one as an investment is a joke. The numbers on me buying v renting would have cost me personally 50 - 60 million baht difference in my assets on my last villa over 3 years !!! Thats a lot of price difference around 60m in 3 years is more than I like to throw away.

[jasreeve17]

'Firstly when inflation increases so do wages, a median home is to be afforded by a median income person.. over time (small blips like the last 5 years and bubbles greenspans easy credit notwithstanding.. Dont worry we will see enough of a house price crash to revert to the mean)... So wages will still pay rents simple.'

I don't believe it to be this simple (either with regard to rental or purchase). When my father bought a house he was a middle earner (policeman) and paid double his annual salary for a three bedrooom house. Twenty years later I was a high earner (more than treble the equivilent earnings of my father) and buying a small one bedroom flat in the same area was five times my earnings. To buy the same house that my father bought years before would have cost more than ten times my annual earnings. = Drastic change over 20 years.[in England]

The housing market has changed drastically over time, these are not small blips. In my opinion home prices in many places are out of control.

An average Thai would need to pay three times their annual salary for a small (25sqm) apartment which is about right prize/salary wise. This places the range of condos that expats live in on a seperate plane (one fuelled by profits gained in crazy markets in their own countries and greedy developers here - not saying that greed is illegal...). It's not sustainable, and the first to suffer will be Thais (because their market is so 'out of sync') and expats who cannot afford a potential loss on their home.

Markets will always correct themselves is an idea that many here follow, but I don't go along with that unless the market is carefully regulated. This market is not. (You could check the parallels with the US problem and the lack of regulation on wall street that was a/the major factor in the housing credit problems.)

I do not know what will happen to housing markets in the future. None the less I feel that the price of housing has become insane and completely out of sync with traditional levels dictated by earnings.

Also, I agree with LivingLOS that I would not invest here in the housing market (or any other area of Thailand). All money I spend here is considered spent, i.e. lost and never to be seen again.

Edited April 23, 2008 by jasreeve17

[LivinLOS]

Your reasons are exactly why I predict a major change in the way housing assets are looked at and a return to more normal historical norms for both the assets prices and the interest fees for credit.

[bingobongo]

given that inflation is ravaging economies across the globe, can any of the "donald trump" wannabes tell me what will happen to condo/property prices if either situation below presents itself in the LOS:

1) inflation is allowed to continue the upward spiral via the printing press, negative REAL interest rates, loose lending practices which results in cheap loans to developers and overindebted consumers (yes in the LOS)

or

2) the Bank of Thailand decides to reign in inflation via interest rate increases or not cutting rates (as the Bank of Thailand rate did this month)

i know the answer but i want to see if the property homedebtors in LOS are being logical or emotional when it comes to 4 walls and plaster

Edited April 24, 2008 by bingobongo

[YoungFarang13]

can you please provide a link to the number of condos/home mortgaged cause i think most are paid in cash.

[pkrv]

given that inflation is ravaging economies across the globe, can any of the "donald trump" wannabes tell me what will happen to condo/property prices if either situation below presents itself in the LOS:

1) inflation is allowed to continue the upward spiral via the printing press, negative REAL interest rates, loose lending practices which results in cheap loans to developers and overindebted consumers (yes in the LOS)

or

2) the Bank of Thailand decides to reign in inflation via interest rate increases or not cutting rates (as the Bank of Thailand rate did this month)

i know the answer but i want to see if the property homedebtors in LOS are being logical or emotional when it comes to 4 walls and plaster

OHH!!! PLEASE SIR, PLEASE SIR I KNOW THE ANSWER - I could not care less, if I have bought for my retirement and am happy with my choice (am I allowed to orgasm now?) then so what - I would however disagree with another poster - wages may increase with inflation but when you exit the job market (retirment etc) income goes down and rent continues to go up, you are:

Running on empty

Caught between a rock and a hard place

Stuck with it

Don't overexpose yourself

Society understands these issues and has many expressions for them.

[LivinLOS]

Not when the amount required to purchase the property returns 3x the rental cost for the same property !!

In my case I made 10x the rental cost with the same amount of capital tied up, each year I rented I made 10 years rent as a ROI.

[WilliamCave]

I bought my motorcycle because I enjoy riding it; not as an investment.

When I build my house it will be because I want to live in a place designed by me; not as an investment.

Why is that so hard for some people to understand?

Couldn't agree more,buying a vehicle, building a house and maybe a TukTuk to run around the village because I want to not about investment,,,,,I want to be comfortable

[backflip]

bingobongo,

With the high inflation, there is one thing that has maintained its value...and that's the value of your free advice. Your predictions and yammerings have been unerringly wrong. You and your likeminded and similarly situated farangs provide postings that provide comedic relief from the ongoing horrors of war perpetuated by Bush43.

[quiksilva]

I can remember the time when interest rates were 16%. People who over expose themselves to interest rate fluctuations will always be in a difficulty.

Property is an illiquid asset, so it must be viewed as a long term investment, its not stocks and shares.

Anyone who purchases real estate and doesn't do their homework by factoring in fluctuations in interest rates over their investment period (I think it it shuld be a minimum ten year period) will be punished, because let's face it economic cycles are a fact, and that's a good thing.

Because just as surely as things get bad but they recover, and eventually to higher levels. AGAIN. I am talking about the long term here i.e. 10 years +

The point is you have make sure that you are not over exposed in the short to medium term so that you are able to ride out the troughs.

[bingobongo]

palm, how is the midlife crisis coming along?

anyway, this does illustrate the mindset of the bubble rather well. Any property is a good property when prices are going up. Quality doesn't matter because the property's desirability comes from increasing prices, not from the characteristics of the property itself.

[rick75]

Bingobongo re: post #17 , I think you will find with the current credit crunch that is engulfing the world at the moment will show your point about cheap loans to developers has a few holes in it, there are no cheap loans at the moment and there won't be for some time, as for the rest I am unsure I am far from an expert on the Thai housing market.

Edited April 26, 2008 by rick75

[bingobongo]

Bingobongo re: post #17 , I think you will find with the current credit crunch that is engulfing the world at the moment will show your point about cheap loans to developers has a few holes in it, there are no cheap loans at the moment and there won't be for some time, as for the rest I am unsure I am far from an expert on the Thai housing market.

sorry there sparky, but when inflation is running at 10+% YOY (check out the prices of oil, sugar, rice, transportation, etc) and not the governement BS reported 4 to 5%, and interest rates being below the level of inflation for both home loans and savings/bonds (in fact negative real rates of interest) that is considered a cheap loan

anyway, if things are going swimmingly, why the need for stimulus? this guy is dreaming, the debt bubble is bursting.........amazing what they will say for a sale

Property sector likely more active in latter half of 2008

It resulted in an unfavourable climate in property trading activities with the demand for housing and commercial building units growing at a slower pace since consumers' purchasing power had declined.

Simultaneously, potential homebuyers are now being more careful in committing themselves to debt obligations from housing purchases and investors are more selective in investment.

http://enews.mcot.net/view.php?id=4045

Edited April 30, 2008 by bingobongo

[pkrv]

Not when the amount required to purchase the property returns 3x the rental cost for the same property !!

In my case I made 10x the rental cost with the same amount of capital tied up, each year I rented I made 10 years rent as a ROI.

I conceed the point! - But I will wish to retire - there is a differnce here, and I know from past posts, not everyone can manage a business

[thaigene2]

I can remember the time when interest rates were 16%. People who over expose themselves to interest rate fluctuations will always be in a difficulty.

Interesting as I can remember when they were up around 24% (about mid-1980s?) Anyway that's when they crashed - toward the end of the 80's. Many, many people walked away from the loans as they're doing now in America. I agree this is cyclical, but what we still don't know - and can only guess - is how deep this will go. For sure it's already moving past the 'loser' class. It's eating its way up the chain in America. And that will have a ripple effect everywhere - especially for those considering a discretionary purchase place like Thailand - anyway, whatever.

As for PKRV - as I said before. Don't sweat it - you have to fear about visa changes and income (unless that's not an issue either).

As for renting - I think LivinLOS hits the nail right on the head. Rents are the best forecaster of the conomy - and what I relaly believe is bullshit-false inflation right now. Why? Becuase thre is NO SCARCITY of rental property. And do you think there will be anytime soon (in Bangkok anyway)? Look at all these places being built 'to rent' out by speculators. Why haven't rents risen before in tandem with the spiraling purchase prices of all these new condos?

[bingobongo]

the inflation #s are out for YOY (March 2007 to March 2008)

notice that inflation is higher for almost everything OTHER than housing?

Housing is at 0.0 and shelter at a paltry 0.3 whereas meat comes in at a whopping 18.7

3000 HOUSING AND FURNISHING 23.86 103.6 103.7 103.5 103.6 103.6 -0.1 0.1 0.0

http://www.indexpr.moc.go.th/price_present..._region=country

[backflip]

bingobongo,

You are a real gourmet of fear and despair, and you've found an audience of like-minded farangs. Good for you.