Gloomy Days Ahead For Asia's Housing Markets

[pkrv]

bingobongo,

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

Correct - PKRV

[pkrv]

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

I don't think that is a fair comment either 'horses for courses', do you agree?

[bingobongo]

now now pkrv and backflip, it is time for today's lesson......are you ready?

Recall that a vacant house/condo in a declining market is not a rising asset--it's a capital trap.

as inflation rages, rates will eventually rise...and any investor worth his/her salt knows that there is an inverse relationship between interest rates and asset/commodity inflation

and i am sure this will not help investor/homedebtor sentiment

Thailand PM issues coup warning

http://newsinfo.inquirer.net/breakingnews/...es-coup-warning

Edited May 2, 2008 by bingobongo

[pkrv]

Bingo -Have you ever discibed the colour green to a blind man?

[Heng]

Yeah, just sold every single last home in April in our Baan Dusit Pattaya project... 106 units. Check.

Just purchased another 70 rai for the next project. Check.

But yeah, hopefully those projects who are overextended and overleveraged do go belly up.

[bingobongo]

why buy in LOS when you can get 40% off in Vietnam, besides Vietnam has a better education system, more vibrant economy and no impending coup.......so if Vietnam is deflating, what would keep LOS from doing the same? nothing

Investors flee freezing property market in Vietnam metro

http://www.thanhniennews.com/business/?cat...mp;newsid=38171

[bingobongo]

inflation rampant and interest rate hikes on the way....

as rates go up, house prices go down......

Thai Inflation Rises at Fastest Pace in Two Years

Higher Borrowing Costs

Bank of Thailand policy makers next meet on May 21 to decide on the benchmark interest rate, held at 3.25 percent at six straight meetings since August. The board will boost borrowing costs to 3.5 percent next quarter, and by another 25 basis points by the end of 2008, JPMorgan economist Sin Beng Ong wrote in a report published on April 25.

http://www.bloomberg.com/apps/news?pid=new...id=aPhkIzxg02Mw

[backflip]

bingobongo,

You have personally caused my cost of living to drop. Really. The Bull's Head pub hosts the Punchline comedy show every month. For 1500THB, I'd listen to 3 farangs talk nonsense. I get the same entertainment from your posts, and it's free.

[BEENTHEREDONETHAT]

Inflation increases also increase the cost of building. When the cost of new buildings go up, so do the value of old buildings. So do you buy now or wait for the inflated price? As the population increases so does the requirement for places to live. Inflation also typically increases the price of rent.

[nothingleftbutfaith]

Yeah, just sold every single last home in April in our Baan Dusit Pattaya project... 106 units. Check.

Just purchased another 70 rai for the next project. Check.

But yeah, hopefully those projects who are overextended and overleveraged do go belly up.

Correction. You received a downpayment on those 106 units, with no guarantee whatsoever of ever getting the balance.

A small correction....

[LivinLOS]

Yeah, just sold every single last home in April in our Baan Dusit Pattaya project... 106 units. Check.

Just purchased another 70 rai for the next project. Check.

But yeah, hopefully those projects who are overextended and overleveraged do go belly up.

Correction. You received a downpayment on those 106 units, with no guarantee whatsoever of ever getting the balance.

A small correction....

How do you know he didnt just sell the final completed unit ??

[nothingleftbutfaith]

Yeah, just sold every single last home in April in our Baan Dusit Pattaya project... 106 units. Check.

Just purchased another 70 rai for the next project. Check.

But yeah, hopefully those projects who are overextended and overleveraged do go belly up.

Correction. You received a downpayment on those 106 units, with no guarantee whatsoever of ever getting the balance.

A small correction....

How do you know he didnt just sell the final completed unit ??

Because that's how the real estate market works in Thailand, and only in Thailand.

All those " sold out " signs on new condos only mean that the developer has received a downpaymenst on 100% of the units available, but with no gurantee that the buyers can come up with the money needed to complete the purchase.

In other words it's a flipper's market.

[zorro1]

Bingo Bongo has a vision since he missed out on making big bucks over the last 5 years in Thailand. He is determined to single handed drive Real estate into recession in the hope All farangs will listen thus creating a Real estate crash allowing Mr Bingo Bongo to finally buy here. But when he succeeds he will no doubt hesitate because he just isn't sure when it will finally bottom out and decide that its the wrong time and miss out on the boom again. And again. And again

[Heng]

Yeah, just sold every single last home in April in our Baan Dusit Pattaya project... 106 units. Check.

Just purchased another 70 rai for the next project. Check.

But yeah, hopefully those projects who are overextended and overleveraged do go belly up.

Correction. You received a downpayment on those 106 units, with no guarantee whatsoever of ever getting the balance.

A small correction....

Correction on your correction. A "sale" is transfer of title (not a reservation, deposit, signing a purchase contract, etc.) with payment in full, whether from the customer's bank or the buyers themselves as a cash purchase. A "down payment" is simply the portion of the payment that is not borrowed from the bank, with the bank providing them a check that makes up the difference to pay us in full, with the buyer paying the bank that difference back over whatever terms and time frame they agree on. Most people call this a "mortgage."

You're probably thinking of buying a car, motorcycle, or refrigerator, where yes, financing directly is much more common.

[Heng]

Yeah, just sold every single last home in April in our Baan Dusit Pattaya project... 106 units. Check.

Just purchased another 70 rai for the next project. Check.

But yeah, hopefully those projects who are overextended and overleveraged do go belly up.

Correction. You received a downpayment on those 106 units, with no guarantee whatsoever of ever getting the balance.

A small correction....

How do you know he didnt just sell the final completed unit ??

Because that's how the real estate market works in Thailand, and only in Thailand.

All those " sold out " signs on new condos only mean that the developer has received a downpaymenst on 100% of the units available, but with no gurantee that the buyers can come up with the money needed to complete the purchase.

Actually you're somewhat correct, just not in our case. Usually if it's one of those "only X units left" signs, then yes, it probably means they are counting deposits and purchase contracts. Many times though, a "sold out" sign means just that, that all titles have been transferred (and when title is transferred, the developer, just like any seller trying to move a single property... gets paid in full). These signs are often ads to point buyers to the next project underway.

[LivinLOS]

Yeah, just sold every single last home in April in our Baan Dusit Pattaya project... 106 units. Check.

Just purchased another 70 rai for the next project. Check.

But yeah, hopefully those projects who are overextended and overleveraged do go belly up.

Correction. You received a downpayment on those 106 units, with no guarantee whatsoever of ever getting the balance.

A small correction....

How do you know he didnt just sell the final completed unit ??

Because that's how the real estate market works in Thailand, and only in Thailand.

All those " sold out " signs on new condos only mean that the developer has received a downpaymenst on 100% of the units available, but with no gurantee that the buyers can come up with the money needed to complete the purchase.

In other words it's a flipper's market.

Well your making assumptions..

I am pretty familiar how the market works here.. I just am not going to jump on the side I want because it fits an argument.

[LivinLOS]

Yeah, just sold every single last home in April in our Baan Dusit Pattaya project... 106 units. Check.

Just purchased another 70 rai for the next project. Check.

But yeah, hopefully those projects who are overextended and overleveraged do go belly up.

Correction. You received a downpayment on those 106 units, with no guarantee whatsoever of ever getting the balance.

A small correction....

Correction on your correction. A "sale" is transfer of title (not a reservation, deposit, signing a purchase contract, etc.) with payment in full, whether from the customer's bank or the buyers themselves as a cash purchase. A "down payment" is simply the portion of the payment that is not borrowed from the bank, with the bank providing them a check that makes up the difference to pay us in full, with the buyer paying the bank that difference back over whatever terms and time frame they agree on. Most people call this a "mortgage."

You're probably thinking of buying a car, motorcycle, or refrigerator, where yes, financing directly is much more common.

So looks like busted !!

[nothingleftbutfaith]

Yeah, just sold every single last home in April in our Baan Dusit Pattaya project... 106 units. Check.

Just purchased another 70 rai for the next project. Check.

But yeah, hopefully those projects who are overextended and overleveraged do go belly up.

Correction. You received a downpayment on those 106 units, with no guarantee whatsoever of ever getting the balance.

A small correction....

Correction on your correction. A "sale" is transfer of title (not a reservation, deposit, signing a purchase contract, etc.) with payment in full, whether from the customer's bank or the buyers themselves as a cash purchase. A "down payment" is simply the portion of the payment that is not borrowed from the bank, with the bank providing them a check that makes up the difference to pay us in full, with the buyer paying the bank that difference back over whatever terms and time frame they agree on. Most people call this a "mortgage."

You're probably thinking of buying a car, motorcycle, or refrigerator, where yes, financing directly is much more common.

So looks like busted !!

Utter bullshit.

[Heng]

You're welcome to come out to the neighborhood and check it out for yourself. And you don't need to hear it from the office staff, feel free to chat up the homeowners at the clubhouse.

[donx]

Yeah, just sold every single last home in April in our Baan Dusit Pattaya project... 106 units. Check.

Just purchased another 70 rai for the next project. Check.

But yeah, hopefully those projects who are overextended and overleveraged do go belly up.

Correction. You received a downpayment on those 106 units, with no guarantee whatsoever of ever getting the balance.

A small correction....

Correction on your correction. A "sale" is transfer of title (not a reservation, deposit, signing a purchase contract, etc.) with payment in full, whether from the customer's bank or the buyers themselves as a cash purchase. A "down payment" is simply the portion of the payment that is not borrowed from the bank, with the bank providing them a check that makes up the difference to pay us in full, with the buyer paying the bank that difference back over whatever terms and time frame they agree on. Most people call this a "mortgage."

You're probably thinking of buying a car, motorcycle, or refrigerator, where yes, financing directly is much more common.

So looks like busted !!

Utter bullshit.

Are you calling Heng a liar?

[bingobongo]

well hello homedebtors....(aka those renting from the bank/builder/or other lending institution)

and hello homeowners....(aka those who own properties free and clear)

remember money tied up in a declining asset is a CAPITAL TRAP

anyway, i love pictures, dont you?

insert, Spain, UK, Vietnam, USA, and LOS (or any other country) for items in RED and you will get the point......why buy now when you can get the same for less later...... interest rate increases by the BOT this year (to control rampant inflation) wont help either.....

Edited May 5, 2008 by bingobongo

[jumnien]

That graph shows land prices going down in Japan. In the US, housing prices are rising 300% over 1987. If prices recede temporarily to a rise of only 260%, is that really a tremendous blessing to home buyers. No it's the sellers who are making the money with the exception of poor fools who bought high in the last 2 years.

[LivinLOS]

That graph shows land prices going down in Japan. In the US, housing prices are rising 300% over 1987. If prices recede temporarily to a rise of only 260%, is that really a tremendous blessing to home buyers. No it's the sellers who are making the money with the exception of poor fools who bought high in the last 2 years.

Or any one that refinanced in the last 2 years...

The home as ATM to drive the global consumer is part of the big problem here..

[quiksilva]

What that graph shows is a recent cycle, in Japan, which is hardly a good benchmark for other Asian countries.

How many other Asian countries have enjoyed sub 1% interest rates over the same period. Japan is a unique market with its own unique problems, (eg never being able to terminate a tenant's lease being one of them) its quite unlike the rest of Asia, and in fact most Asian countries have their own unique quirks and practices (just look at South Korea).

To get an idea of what is truly happening we should only compare apples with apples. So in this forum about Thai real estate we should just consider statistics about the Thai market.

That does not mean that I am blind to the way that macro economics work in today's globalised marketplace, far from it. However, the underlying fundamental truth is that real estate markets are driven by local conditions. Domestic supply and demand, trumps all other considerations.

Unfortunately the graph posted does not really tell us all that much. Values go up and down, and just as surely as things go down they come back up again, and vice versa. C'est la vie!

Take that chart back to the 1970's, and now tell me is the bottom of the trough then, higher or lower than today than the bottom of the trough today?

What is the general trend?

The only take away from this should be "Unless you are flipping in a hot market, real estate investment should be a long term play".

Edited May 6, 2008 by quiksilva

[Sir Burr]

Hmmmm......I bought land and built a house 8 years ago in Phuket. It has now roughly doubled (or, tripled if I listened to some people) in value.

I built it to live in it, so, I don't really care if prices go up, or, down.

Actually, prices going down is only limited to houses built by foreigners. Thais NEVER lower the price, even when there are no buyers. Best they do is not raise the price.

[pkrv]

Lies Dammed Lies and Statistics. Never trust a graph (Bingo pretty picture) that deliberately distorts its axis, and does not compare things with all data available. True this ‘subset of data’ can be used to drive/fuel 'emotional' responses, the trick is to recognise when you are 'being tricked by statistical evidence'.

[clausewitz]

Unfortunately the graph posted does not really tell us all that much. Values go up and down, and just as surely as things go down they come back up again, and vice versa. C'est la vie!

Take that chart back to the 1970's, and now tell me is the bottom of the trough then, higher or lower than today than the bottom of the trough today?

What is the general trend?

A few posts ago you were sayng that if you wait 10 years or so prices will go up. Now you are saying that prices from 1980 to now are just an abberatioin and we have to go back to the 70s? What about the millions of Japanese who bought housing in the late 80s. That is 20 years ago. Comforting them by saying the longterm trend means their house will one day be worth more: Just how long do you think that will be. Prices now are lower than they were even 3 years ago and still no firm bottom to the market.

Comparing the Japanese market with Bangkok- in tokyo there is almost 99% occupancy, while in Bangkok there are around 300,000 empty units.

[bingobongo]

don't hate the player (bingobongo), hate the game (bloated debt and negative real interest rates)........ rates will be raised as folks need affordable food and oil, not overbuilt, overpriced 4 walls and plaster.....

May 1 – Bloomberg (Suttinee Yuvejwattana and Rattaphol Onsanit): "Thailand's inflation accelerated at the fastest pace since 2005 in April as food and oil prices surged to records… Consumer prices gained 6.2% last month from a year earlier…"

April 28 – Bloomberg (Shamim Adam): "Central bank officials in Indonesia, the Philippines and Thailand may raise interest rates this year as higher oil and commodity prices feed into inflation, according to JPMorgan…

Edited May 6, 2008 by bingobongo

[quiksilva]

Unfortunately the graph posted does not really tell us all that much. Values go up and down, and just as surely as things go down they come back up again, and vice versa. C'est la vie!

Take that chart back to the 1970's, and now tell me is the bottom of the trough then, higher or lower than today than the bottom of the trough today?

What is the general trend?

A few posts ago you were sayng that if you wait 10 years or so prices will go up. Now you are saying that prices from 1980 to now are just an abberatioin and we have to go back to the 70s? What about the millions of Japanese who bought housing in the late 80s. That is 20 years ago. Comforting them by saying the longterm trend means their house will one day be worth more: Just how long do you think that will be. Prices now are lower than they were even 3 years ago and still no firm bottom to the market.

Comparing the Japanese market with Bangkok- in tokyo there is almost 99% occupancy, while in Bangkok there are around 300,000 empty units.

What I am saying (and have always said) is that real estate markets move in cycles, and the general trend is upwards. Cycles in different markets move at different rates, although 10 years is usually long enough to see a the trend move.

As to whether that comforts the Japanese, who can say. Their economy has not exactly been going great guns since the late '80s has it? Japan's property boom was fueled by a prolonged period of extremely low interest rates (sub 1%). Their market was unique, investors flocked their in droves from all over the world. Not because the returns on investment were high, they actually were about 4-5% on average, but because of the spread between interest rates and yields.

But what does it have to do with the Thai real estate market? Nothing. As I said before markets are driven by local factors. The only people comparing Japan and Thailand here seem to be you and Bingo "da pimp" Bongo.

Now your stats are interesting, 300,000 vacant units you say? Really? Vacant? So what about total supply? Most condominium projects have approx 80 units (EIA is needed for larger projects and developers prefer to avoid that if possible, they are expensive and take 6 months to complete), but lets say the average size is 150 units. Do you really think that there are 2,000 empty condominium towers in Bangkok? So how many condominium towers do you think there here?

According to our dedicated research team, at the end of 2007 the total supply of condominium units was 59,172 units in Bangkok, that's total.

You say prices are lower today than they were 3 years ago and "there is no sign of it bottoming out". OK the prices of what exactly? 3 years ago most developers were targeting a higher income bracket, and thus the price points (and quality) of the products released to market were higher. So yes prices are lower but that does not mean that values have fallen.

That is not to say that there are not any new projects targeting the high end sector today, there are just that there are more units being released in the lower sector (i.e. less than 60,000 Baht per square meter).

Again compare apples with apples.

You asked me how long do I think it will take to see capital appreciation, and if I was forced to make a guess I'd say 10 years. Nobody has a crystal ball but based on historical trends that seems to be a reasonable estimate.

But that of course is an estimate towards the whole market, as to whether that applies to your property it will depend on its maintenance, management, location, infrastructure, planning etc.

I do not put myself in the rose tinted glasses brigade, the economic outlook is not great. However, it does not mean that the sky is falling. Interest rates will surely rise, and as they do, as in all markets everywhere in the world, those who were shortsighted or stretched themselves too far will suffer. Again, c'est la vie.

[bingobongo]

patience is all you really need.......rates will rise

Thailand and the Philippines, face policy dilemmas of rising inflation and sluggish growth. FDI and domestic demand have been slow to pick up in Thailand since the coup's end, while the Philippines suffers the lowest FDI in the region due to crumbling infrastructure and corruption. Both countries are in need of stimulative monetary policy at a time when annual headline inflation has climbed above 5% in Thailand and 6% in the Philippines due to soaring food and fuel prices.

Nonetheless, their monetary authorities are considering rate hikes to dampen inflation – even if local rate hikes in these small countries are not likely to be very effective on inflationary problems with global roots. The risk is that food and fuel prices rise faster than the baht and peso appreciate as continued strong demand from commodity-hungry nations like China and India keep world prices high. Some argue though that policy rates have gone down far enough – real interest rates are already negative and nominal rates are below U.S. rates.

Edited May 7, 2008 by bingobongo