Inflation, Recession, Condo Prices

[BEENTHEREDONETHAT]

Inflation makes the prices go up, recession makes the prices go down. Inflation is almost guaranteed, recession in Thailand?

So what is your SWAG (scientific wild ass guess) as to the prices of condos in 2 years. Useing 100,000B m2 as a reference for present prices where do you think it will be July 2010?

[zorro1]

Prices don't seem to get driven down because of Thais reluctance to sell at a loss. At very worst they will stay at 100,000

[kyb789]

Prices don't seem to get driven down because of Thais reluctance to sell at a loss. At very worst they will stay at 100,000

When I was looking for a rental apartment, I saw an endless supply of vacant condos barely furnished. With almost no exception each unit was "for rent" AND "for sale". If the owner didn't get the price they wanted, the unit would sit empty. Month after month. Someone please do the math and explain their losses to them.

[PattayaParent]

Prices don't seem to get driven down because of Thais reluctance to sell at a loss. At very worst they will stay at 100,000

At the very best they will stay at 100,000 because if the Thais can't sell the condos at the price they want they will raise the prices until they do.

[soundman]

Prices don't seem to get driven down because of Thais reluctance to sell at a loss. At very worst they will stay at 100,000

They might wait ten years to achieve that 100k, but then is the 100k still worth a 100k or more like 40k as the actual value of the denomination has been eroded by inflation.

So the seller might still get "100k" after waiting a lengthy period of time, however, in real terms he may be making a hefty loss.

[tomuk76]

Prices don't seem to get driven down because of Thais reluctance to sell at a loss. At very worst they will stay at 100,000

They might wait ten years to achieve that 100k, but then is the 100k still worth a 100k or more like 40k as the actual value of the denomination has been eroded by inflation.

So the seller might still get "100k" after waiting a lengthy period of time, however, in real terms he may be making a hefty loss.

Dont generalise, not all thais are the same! I assume the thais i know would sell at the price that benefits them short or long term!

[glyph]

"Prices don't seem to get driven down because of Thais reluctance to sell at a loss."

Which nationalities are not reluctant to sell at a loss"

[tomuk76]

"Prices don't seem to get driven down because of Thais reluctance to sell at a loss."

Which nationalities are not reluctant to sell at a loss"

I agree totally, from the way people where posting it was as though they were making out thais are clueless, and most of you live in there country. tut tut

[Prakanong]

Prices don't seem to get driven down because of Thais reluctance to sell at a loss. At very worst they will stay at 100,000

They might wait ten years to achieve that 100k, but then is the 100k still worth a 100k or more like 40k as the actual value of the denomination has been eroded by inflation.

So the seller might still get "100k" after waiting a lengthy period of time, however, in real terms he may be making a hefty loss.

Try explaining "Net present value" to them

[Prakanong]

"Prices don't seem to get driven down because of Thais reluctance to sell at a loss."

Which nationalities are not reluctant to sell at a loss"

Very true - no-one wants to sell at a loss.

Its not just Thai's but I see other Asians as well such as here in Singapore that get a price stuck in their heads for rental and will not budge and rather have an empty apartment for 1+ years rather than reduce the asking price for the rent - partly face and whatever I suppose.

[zorro1]

"Prices don't seem to get driven down because of Thais reluctance to sell at a loss."

Which nationalities are not reluctant to sell at a loss"

I agree totally, from the way people where posting it was as though they were making out thais are clueless, and most of you live in there country. tut tut

Your the only one mentioning Thais are clueless and Im baffled how you came to that response. If anything its the total reverse. Naturally its human nature to be reluctant to lose in any country however the Thais are quite dogged about it and good luck to them

[malcolminthemiddle]

Who said anything about selling at a loss?

Is it not safe to say the asking price of Baht 100,000 per m2 already includes a margin on the original buying price?

[BEENTHEREDONETHAT]

It appears the majority agree with Zorro "At worse they will stay at 100,000 baht m2"

If inflation for building material is at 10-20% a year, won't new construction have to sell for more?

Or will construction stop until buyers return?

Or is enough cushion built into the price to absorb the increase?

When the price of new construction goes up, does it tend to drag the old up with it?

[soundman]

"Prices don't seem to get driven down because of Thais reluctance to sell at a loss."

Which nationalities are not reluctant to sell at a loss"

I agree totally, from the way people where posting it was as though they were making out thais are clueless, and most of you live in there country. tut tut

Your the only one mentioning Thais are clueless and Im baffled how you came to that response. If anything its the total reverse. Naturally its human nature to be reluctant to lose in any country however the Thais are quite dogged about it and good luck to them

With regards to those having the means to invest in property, comparibly, there are just as many clueless Thai's and just as many smart Thai's per capita as most other countries in the world.

The smart ones keep adjusting their price to suit current market conditions &/or actual desire to sell, they usually don't get involved with projects or property that might not perform well, or they can't on sell before the project has been completed. Most know what shit heaps many condo (moo bahn) complexes turn into ten years after completion, & have no desire to enter the second hand condo market.

Many of these "smart ones" are actually making purchases in the condo/townhouse market to keep any spare cash out of sight & out of the hands of their spendthrift children.

The really smart ones, and there are plenty of them in Thailand (many of Chinese origin), rarely sell property unless they are offered absurd prices to part with it, for they know that land/property that remains in the family for generations earning meagre/reasonable returns combined with the fact that land out performs most other markets in gains over the long haul will make the family far wealthier than a little spontaneous trading & short term dabbling in the property market.

Getting back to the "recession" affecting the price of "your" condo. Nothing affects the gain/loss unless you actually sell it. So the avg. price is down during the recession, so what! Just because the price is a little bearish doesn't mean you have to sell. The next bull is never too many years away, unless you decide to buy near the sites recently earmarked for sewage stations or nuclear power plants.

Soundman.

[bendix]

I'm not sure who the 'clueless' property speculators are.

On the one hand there are the cashed up Thais who buy places and then don't sell them or rent them unless they can get the prices they want.

Or there are the millions and millions of Brits, Americans, Aussies etc who bought houses they couldn't afford on loans they can barely repay at market prices that were grossly overflated in the ludicrous hope that such prices would continue to rise, and then find the merest hike in interest rates means they have to foreclose?

Clueless or clueless? You decide

[AFKAFSinLOS]

I'm not sure who the 'clueless' property speculators are.

On the one hand there are the cashed up Thais who buy places and then don't sell them or rent them unless they can get the prices they want.

Or there are the millions and millions of Brits, Americans, Aussies etc who bought houses they couldn't afford on loans they can barely repay at market prices that were grossly overflated in the ludicrous hope that such prices would continue to rise, and then find the merest hike in interest rates means they have to foreclose?

Clueless or clueless? You decide

Had to smile at this one...

Extending a little further, I guess in the west, given a more even wealth distribution, at least most people get the opportunity to be clueless...

[pkrv]

Condominiums to get costlier says The Nation

http://www.nationmultimedia.com/2008/07/01...ss_30076914.php

[Forkinhades]

You see many propeties empty for ages here in LOS, with a sign outside SALE / RENT. But if the Thais sold how much interest would they get on their money? 1% ??, whereas the western people could put that money into an account that will give them 6.5%, this is probably why the thais just sit on the price they want, and they have no understanding of a yield! (probably most Buy To Letters in the west as well:))

I wait to get flamed

[jumnien]

You see many propeties empty for ages here in LOS, with a sign outside SALE / RENT. But if the Thais sold how much interest would they get on their money? 1% ??, whereas the western people could put that money into an account that will give them 6.5%, this is probably why the thais just sit on the price they want, and they have no understanding of a yield! (probably most Buy To Letters in the west as well:))

I wait to get flamed

Interest rates in Thai accounts are now 4% if you want. Check out CD accounts.

[Forkinhades]

Interest rates in Thai accounts are now 4% if you want. Check out CD accounts.

well if they are, then thais are Stupid to sit on property that are not going up in price, and losing rent

[bendix]

In addition, there is absolutely nothing to stop Thais taking advantage of the global economy and getting much better interest rates you mention in other countries, either direct or in foreign currency accounts in Thailand. And, given the high baht and the likelihood it will depreciate over the next two years, they'll make a real killing.

[london]

In 2 years time: a steady rise in price due to inflation.

Its not a boom and it wont be a bust.

[soundman]

And, given the high baht and the likelihood it will depreciate over the next two years, they'll make a real killing.

'97 and a few government ministers with inside info. converting huge amounts of thai baht to american dollars for a few months rings the bell.

[thaihome]

Interest rates in Thai accounts are now 4% if you want. Check out CD accounts.

well if they are, then thais are Stupid to sit on property that are not going up in price, and losing rent

As explained earlier, some people, and it seems much more common in Asia, are not that interested in short or even medium term gains. They are looking forward across multiple generations. These is a concept so alien to the current idea of short term gains and rapid turnover of property, that the only reaction people seem to be able to have is to call it stupid.

Note that in many cases these are the families ones that end up owning the most valuable property in the very long term. But how many western property speculators today think about their yet unborn great grandchildren.

TH

[glyph]

"In 2 years time: a steady rise in price due to inflation."

And increase in demand.

[midas]

"In 2 years time: a steady rise in price due to inflation."

And increase in demand.

WHY exactly will there be an increase in demand based on current global trends ?

[Prakanong]

Interest rates in Thai accounts are now 4% if you want. Check out CD accounts.

well if they are, then thais are Stupid to sit on property that are not going up in price, and losing rent

As explained earlier, some people, and it seems much more common in Asia, are not that interested in short or even medium term gains. They are looking forward across multiple generations. These is a concept so alien to the current idea of short term gains and rapid turnover of property, that the only reaction people seem to be able to have is to call it stupid.

Note that in many cases these are the families ones that end up owning the most valuable property in the very long term. But how many western property speculators today think about their yet unborn great grandchildren.

TH

Totally correct in that many Asians have a much longer term perspective and there are other cultural and environmental factors why they like to own land and property too.

Thing is though you see reported the decendants squabbling weekly here in Singapore over the will's and properties of their parents and grandparents - from small flats right up to large office blocks it a national pastime

[pkrv]

Interest rates in Thai accounts are now 4% if you want. Check out CD accounts.

well if they are, then thais are Stupid to sit on property that are not going up in price, and losing rent

As explained earlier, some people, and it seems much more common in Asia, are not that interested in short or even medium term gains. They are looking forward across multiple generations. These is a concept so alien to the current idea of short term gains and rapid turnover of property, that the only reaction people seem to be able to have is to call it stupid.

Note that in many cases these are the families ones that end up owning the most valuable property in the very long term. But how many western property speculators today think about their yet unborn great grandchildren.

TH

Totally correct in that many Asians have a much longer term perspective and there are other cultural and environmental factors why they like to own land and property too.

Thing is though you see reported the decendants squabbling weekly here in Singapore over the will's and properties of their parents and grandparents - from small flats right up to large office blocks it a national pastime

I liked these perspectives, and I agree with them - I would hazard a guess on a couple of other points. Buying property for your children does (to some extent there are always idiotic exceptions) ensure their future. However it also 'parks' money outside of tax collection and keeps the money under direct family control. Hence you are not necessarily funding that which you do not agree with.

Perhaps that is why the 'controlled press' in Singapore prints such triviality, rather than explore its own failings as a democracy. On the exercise of such family based control on a much larger scale (democracy, key industry, resources etc) such people would find this property purchase activity a threat! After all someone may one day have sufficient resources to ask for democracy and win!

[glyph]

"WHY exactly will there be an increase in demand based on current global trends ? "

Your perspective is similar to many TVers. You're only thinking short term, basing your investment portfolio on the next 60 days.

[Prakanong]

Interest rates in Thai accounts are now 4% if you want. Check out CD accounts.

well if they are, then thais are Stupid to sit on property that are not going up in price, and losing rent

As explained earlier, some people, and it seems much more common in Asia, are not that interested in short or even medium term gains. They are looking forward across multiple generations. These is a concept so alien to the current idea of short term gains and rapid turnover of property, that the only reaction people seem to be able to have is to call it stupid.

Note that in many cases these are the families ones that end up owning the most valuable property in the very long term. But how many western property speculators today think about their yet unborn great grandchildren.

TH

Totally correct in that many Asians have a much longer term perspective and there are other cultural and environmental factors why they like to own land and property too.

Thing is though you see reported the decendants squabbling weekly here in Singapore over the will's and properties of their parents and grandparents - from small flats right up to large office blocks it a national pastime

I liked these perspectives, and I agree with them - I would hazard a guess on a couple of other points. Buying property for your children does (to some extent there are always idiotic exceptions) ensure their future. However it also 'parks' money outside of tax collection and keeps the money under direct family control. Hence you are not necessarily funding that which you do not agree with.

Perhaps that is why the 'controlled press' in Singapore prints such triviality, rather than explore its own failings as a democracy. On the exercise of such family based control on a much larger scale (democracy, key industry, resources etc) such people would find this property purchase activity a threat! After all someone may one day have sufficient resources to ask for democracy and win!

Plenty of resources in Singapore to ask for what they want - it seems to be outsiders though that are so concerned with the idea of imposing their ideology of Democracy in Singapore - the Singaporeans themselves do not seem to want the multi-party democracy we in the west desire or see as an ideal - one mans meat and all that.

It might even go further than that now with the Chinese model of economic growth being so successful - they are even lecturing the Yankee's now showing their growth model is superior and might just be better for developing nations than the miserably failed Washington Consensus model