The Housing Market Is Dead

[jitagon]

Well house owners in my neighbourhood have finally stopped flogging their dead horse and have begun to take their 'for sale' signs down (no, they haven't sold). Real estate agents seem to be coming up with increasingly desperate ways to sell properties, 'partial ownership' (read timeshare) and the like. It seems this has been happening all over the country, not limited to any one particular area. The housing market has been in decline way before this year's credit crunch. When was the defining moment of the market's collapse for Thailand? Was their one?

[lazeeboy]

for samui it was 2006 ,when the last scamming came to light..

[gusgorman]

Just to correct the opening post, it was NOT real estate agents who came up with ideas such as partial ownership, it was developers and such like. I realise everyone always jumps on the blame the real estate agents band wagon, but fact is they are never the ones who devise such ideas, that is down to developers and land owners etc.

The defining moment for the Thai market failures has been first the Tsunami, then the coup, now the global credit problems. So long as the PAD keep <deleted> about being bad losers about the democratic election the market will continue to be bad for a lot longer. Many people i know have been put off investing/holidaying here due to the continued political unrest. Until this country gains some mature standing in the worlds stage it will never be taken seriously.

[Mobi]

Yes, it probably started around 2006.

Oversupply, anti farang sentiment and visa tightening rules, problems over nominee companies and the FBA, increasingly unstable and uncertain political situation, and now the credit crunch and world wide economic woes have all contributed to the current housing slump in LOS.

I firmly believe that the long term prospects for the upmarket/farang housing market in Thailand are good, because all the basic ingredients are still there - i.e. climate, cheap living, affordable luxury accommodation etc.

But long term could be as long as 5 years, or even longer. Thailand needs to sort out it's myriad problems and become governenable before the buyers will start to re - enter the market in significant numbers.

[think_too_mut]

The defining moment could be somewhere in Q4 2006.

Then you had this site (especially this section) swamped with desperate real estate agents (several as sponsors)blowing winds and making up success stories. Hardly any of them are still around. Somehow, the onslaught ended when some were arrested and deported (it was in the news, with pictures and even some of their associates came here to campaign for their innocence).

I got suspension 2 times for fighting with them, right in this section.

One of the last fireworks they (RE agents) threw was when one member started a topic called "Proof that housing market in Thailand is booming", what BS was released in there, unbelievable.

Another sign since then, and has became much rarer, is when a board member looks for an approval from someone and posts about a good deal he had made, good location...whatever, just not to feel alone with his (he subconciously and rightly believes wrong) decision.

Of course, nothing of this applies to people who bought to live in.

[gusgorman]

Quite right Mobi, the basic ingredients are there. But even if the government did sort out their problems here in the next 6 months or so, the feelings of many would still be one of distrust.

Like this years introduction of the 0.1% transfer tax, next year the government will need to introduce even bigger and better incentives to attract back foreign investment in property. It has been suggested for many years now that they will extend the term of the lease from 30 years up to perhaps 50 or as much as 90 years. This would be a massive help.

[Mobi]

That is why I tentatively threw out a period of at least 5 years for confidence to return.

5 years of stable governement and more a sensible attitude to foreign investors may change the market around. If not it could be 10 years or longer, or never.

May we should consult the fortune tellers like all good Thai Prime ministers and army generals.

[gusgorman]

May we should consult the fortune tellers like all good Thai Prime ministers and army generals.

I did:-) They told me this year would be a bloody hard slog but next year all would come good as it is a year with a 9 in it and i turn 40 years old at the end of this year which is also good. So gauranteed market up turns next year for all!

[Heng]

So why is it still so <deleted>' crowded at various land department offices (for me lately: Minburi and Pattaya)?

[BEENTHEREDONETHAT]

So why is it still so <deleted>' crowded at various land department offices (for me lately: Minburi and Pattaya)?

Perhaps filled with people buying condos. That market has slowed but is far from dead.

[wensiensheng]

Personally, I think the big trigger that killed the housing market was the FBA changes that blew away the ability for farang to own property through a Thai company.

There have been other events that have been mentioned, like Tsunami, like military revolution, like global credit crunch etc, but I htin these are just events that produce a buying opportunity. But, if I can't own my property, I don't care what the price is, I won't buy.

So for me, the FBA change is what killed the market in terms of numbers of transactions, the other "events" just push the prices up or down depending on what is going on at any given time.

Condo's are different of course.

Stangely enough, there is still a lot of development going on. In my Soi in Phuket, there are over 30 houses for sale ranging from 35 million baht to 4 million baht. All just 1 house here, 3 houses there, not one big development. But a guy has just started to build another 3 houses next door to me. Why? Goodness only knows. Everyone seems to think their houses are going to be great and sell like hot cakes.

[gusgorman]

The land office here in Phuket is always busy too, but that i think you will find is more due to the fact that they work so dam_n slow each customer is in there all day, so it always looks busy.

[Mobi]

So why is it still so <deleted>' crowded at various land department offices (for me lately: Minburi and Pattaya)?

Well, a few guesses.

We have heard from a similar thread on the Pattaya forum that some high end houses in first class locations (sea views etc) are still selling well. Maybe, maybe not, but certainly possible.

Condos are still selling - that's for sure.

Still plenty of farangs who have been 'persuaded' to buy houses in wives' names.

Maybe many more farangs who are transferring their houses into wives' names in return for leases/usufructs to avoid the FBA nominee rules.

My understanding is that some land offices are more conducive to registering houses in company names than others. At one time, at the height fo the nominee problem, the land office in Pattaya was being so difficult that the lawyers were running down to Rayong to do their business. I understand that the Pattaya office is now back in business - for a certain extra consideration, of course.

But at the end of the day there is little doubt that a majority of the housing market has ground to a halt, and most developers and farangs alike can't move their property for love or money

[wensiensheng]

That is fine by me! Less property sales = less development = less construction noise and lorry traffic.

[glyph]

"When was the defining moment of the market's collapse for Thailand? Was their one? "

Nope, the market hasn't collapsed.

[dabhand]

Another reason for Land Offices being busy may be connected to loans being backed by title deeds.

A number of people are using property as collateral when taking out loans - it can allow for a reduced interest rate offered by loan sharks, who are hoping for repayment problems with potential for property on the cheap.

[yabaaaa]

Well house owners in my neighbourhood have finally stopped flogging their dead horse and have begun to take their 'for sale' signs down (no, they haven't sold). Real estate agents seem to be coming up with increasingly desperate ways to sell properties, 'partial ownership' (read timeshare) and the like. It seems this has been happening all over the country, not limited to any one particular area. The housing market has been in decline way before this year's credit crunch. When was the defining moment of the market's collapse for Thailand? Was their one?

Dont know dont care but maybe a good time to buy. Bought 1 more condo this year already will keep saving.

[Naam]

Personally, I think the big trigger that killed the housing market was the FBA changes that blew away the ability for farang to own property through a Thai company.

says who? farangs can and are still buying property via the company route. correct is that a lot of them are scared to do so.

[Pushit]

The Thai property market is alive and well, my wife just bought a townhouse gated community in East Bkk with immediate access to expressways, eastern circular road, Srinakarin and Ramkamhaeng Road. Project is now sold out and on previous construction materials cost. Smart lady.

[NotNew2You]

Personally, I think the big trigger that killed the housing market was the FBA changes that blew away the ability for farang to own property through a Thai company.

The only problem with this statement is that the rules never changed!

[NotNew2You]

Oversupply, anti farang sentiment and visa tightening rules, problems over nominee companies and the FBA...and credit crunch and world wide economic woes....

I firmly believe that the long term prospects for the upmarket/farang housing market in Thailand are good, because all the basic ingredients are still there - i.e. climate, cheap living, affordable luxury accommodation etc.

I would tend to agree with you Mobi. However, I would emphasize the oversupply and credit-crunch and general economic slowdown being the general reasons. Also, the rampant speculation and [nominal] price appreciation would also factor in...prices just got ahead of demand. I mean, with the housing price declines in many parts of the US of 25-50%, many mid-market homes in various parts of Thailand are more expensive than equivalent homes in the US (however operating costs and taxes are still much lower).

I agree that the basic demand story is still intact, with the impending retirement of the baby bubble generation over the next 20 years in the US and Europe, many of these will decide to retire overseas for many reasons and Thailand will surely take a part of this market.

Edited September 6, 2008 by NotNew2You

[zorro1]

"When was the defining moment of the market's collapse for Thailand"

What are you on about ? Please at least bother to do a search before posting.

Just go back to the first ever thread posted on TV. Its been collapsing since then apparently ..

[LaoPo]

So why is it still so <deleted>' crowded at various land department offices (for me lately: Minburi and Pattaya)?

Maybe it's you who is able to enlighten the situation ? In your situation you talk and negotiate on a daily basis with sellers, buyers, real estate agents etc; so you must be able to judge (more or less) the real estate situation in your area and/or the rest of the country, more so than a farang....?

In Europe there is the so called Cadastre or Cadaster; "a comprehensive register of the metes and bounds real property of a country, and commonly includes details of the ownership, the tenure, the precise location (some can include GPS coordinates), the dimensions (and area), the cultivations if rural and the value of individual parcels of land." (Wiki)

Also, there are reliable sources of market prices going up or down, buying/selling leads etc. where one can trust upon; even per region and/or provinces.

Is/are there any such sources available in Thailand that you know of ?

Newspapers and/or Thaivisa are hardly reliable factual resources.....or are they ?

LaoPo

[Pushit]

Please can we define this "Housing Market Slowdon" as Foreigner or Thai overall because from where I'm sitting the Thai property market for new developments is in high gear.

[jitagon]

Well, as I suspected, the ones with the most vested of interests, those who make their living from the property market here, the real estate agents, the developers, the three percenters, are the ones so far getting all huffy and 'in denial'. So. Any house owners out there who may have been trying to sell for a while like to weigh in and add a little more balance?

[Heng]

So why is it still so <deleted>' crowded at various land department offices (for me lately: Minburi and Pattaya)?

Maybe it's you who is able to enlighten the situation ? In your situation you talk and negotiate on a daily basis with sellers, buyers, real estate agents etc; so you must be able to judge (more or less) the real estate situation in your area and/or the rest of the country, more so than a farang....?

The foreign, of which the 'farang' segment is only a part of, is itself only a minute part of the market. It's curious as to why so many people look at that rather limited segment and judge the state of the entire market. Sure, it's a nice indicator of sorts, but at the same time can be somewhat detached and inconsequential.

And don't get me wrong, I'm not one of those to talk the market up or down either way... as the worse things get, the better off we are, relatively speaking (since we're a non-leveraged operation).

...again, for anyone who thinks the market is at a stand still, just go down to your local land office and you can actually watch property trade hands (not exactly at a feverish pace... kind of more like an endless tide feeling that kind of wanes as the business day goes on); it's not just a show they are putting on to impress you (like it's your village wedding or something); it's a mosaic, like any market, you'll have people who are selling up because they can't deal with these higher interest rates or whatever overhead costs they have in their lives, and you have people with cash reserves willing to pick these up;

Edited September 6, 2008 by Heng

[lannarebirth]

So why is it still so <deleted>' crowded at various land department offices (for me lately: Minburi and Pattaya)?

Maybe it's you who is able to enlighten the situation ? In your situation you talk and negotiate on a daily basis with sellers, buyers, real estate agents etc; so you must be able to judge (more or less) the real estate situation in your area and/or the rest of the country, more so than a farang....?

The foreign, of which the 'farang' segment is only a part of, is itself only a minute part of the market. It's curious as to why so many people look at that rather limited segment and judge the state of the entire market. Sure, it's a nice indicator of sorts, but at the same time can be somewhat detached and inconsequential.

And don't get me wrong, I'm not one of those to talk the market up or down either way... as the worse things get, the better off we are, relatively speaking (since we're a non-leveraged operation).

...again, for anyone who thinks the market is at a stand still, just go down to your local land office and you can actually watch property trade hands; it's not just a show they are putting on to impress you (like it's your village wedding or something); it's a mosaic, like any market, you'll have people who are selling up because they can't deal with these higher interest rates or whatever overhead costs they have in their lives, and you have people with cash reserves willing to pick these up;

I have no insight on home sales, but Heng is correct, land sales are very brisk and not at fire sale prices either.

Most Thais I know have at least 3-4 properties scattered about the country. If they come into some money, they buy more. I mean, what would you do if inflation was 9% and the bank was paying 3%?

[bingobongo]

right sales are brisk all right, briskly down....see Table 6 as of June 2008, the stupid deserve to be insolvent and separated from their money

so lets see, BOT raising rates, inflation rampant, gvt on verge of collapse, and baht about to head over the cliff....... amazing how everyone wants to be an "asset manager" but base their "genius" on how busy an office is or is not

take my advice, the only real estate some of you (not all) should be managing is the real estate that your backside occupies when you are on a bar stool or in a chair eating som tham

land sales nationwide DOWN 41.9%

new housing (condos/apratments) in Bangkok UP 236%, Bangkok condo registriations up 128%

even a 3rd grade (western educated and not thai educted) math student can see a problem here

indicators.pdf

Edited September 6, 2008 by bingobongo

[zorro1]

right sales are brisk all right, briskly down....see Table 6 as of June 2008, the stupid deserve to be insolvent and separated from their money

so lets see, BOT raising rates, inflation rampant, gvt on verge of collapse, and baht about to head over the cliff....... amazing how everyone wants to be an "asset manager" but base their "genius" on how busy an office is or is not

take my advice, the only real estate some of you (not all) should be managing is the real estate that your backside occupies when you are on a bar stool or in a chair eating som tham

land sales nationwide DOWN 41.9%

new housing (condos/apratments) in Bangkok UP 236%, Bangkok condo registriations up 128%

even a 3rd grade (western educated and not thai educted) math student can see a problem here

indicators.pdf

That's actually very funny

Edited September 6, 2008 by zorro1

[think_too_mut]

The Thai property market is alive and well, my wife just bought a townhouse gated community in East Bkk with immediate access to expressways, eastern circular road, Srinakarin and Ramkamhaeng Road. Project is now sold out and on previous construction materials cost. Smart lady.

Did she?

Her own money or yours?

And you were there just a spectator? Or you have had some other role?