Will A Strengthening Baht Lead To Lower Property Prices ?

[churchill]

Will the Baht and other currencies in this region strengthening lead to lower property prices ?

Perhaps it will lead to extra investment demand as investors from Europe and the US seek to protect their assets from falling currencies / Switzerland has always had a strong currency ? and high property prices - What is happening in Australia is their currency effecting property /

and As wealth increases in this region it should lead to increased property demand ?

Any views of how a strong currency effects property and land prices /

Baht strength dents foreigners' demand for luxury residential units

see http://www.nationmultimedia.com/home/2010/09/16/business/Baht-strength-dents-foreigners&039;-demand-for-lux-30138091.html

[Lancelot]

Conventional logic would indicate that (lower property prices.) As I understand it, real property in Thailand is purchased with cas or mortaged with considerable amounts down; therefore, owners are much less likely to walk away from the loan. In other words, the owners will hold the property until prices rise to the point where they will realize a profit...

[trogers]

Supply and demand rules. The only way there is to be a jump in property prices significantly above annual inflation rate would be a sudden spike in foreign demand, with supply requiring a lag time of 15-20 months to catch up. But there has been quite a built up of excess in the last 3 years that first has to be taken up before demand exceed supply to cause a spike in prices.

Knowing how short term foreign funds will flow in and out, prices of liquid assets will more likely be seeing inflated prices, rather than real properties.

I would not hold my breath and wait for lower property prices. I expect prices to move sideways.

Edited September 16, 2010 by trogers

[UberBraun]

Thai Logic: Lower demand so increase price to offset lower demand.

[PattayaParent]

NO, property prices will remain the same in Thai Baht but will be more expensive for foreigners to buy because of the lower exchange rate.

[coldmike]

Since foreigners cannot own land, the strong baht should have little effect on property other than townhomes or condos specifically marketed at farangs. The Thai economy is performing better that the US and most

of Europe so the expectation would be that the property market would begin to head up. Anecdotally, I have heard the the property market in Hua Hin and Cha am was heating up, but with only Thai buyers.

[Boater]

i have noticed alot of european sellers ARE lowering their prices on property, some even selling cheaper then what they bought in for in THB

one example , if someone from the uk bought a proeprty in 2006 when the THB was 75 to the pound and the house cost 10 Mill they basically paid 133 K GBP

now even if they sell the house for 7 million THB and transfer back to the UK, they will get 148 K back, thus a profit of about 15 K ....

[ableguy]

Since foreigners cannot own land, the strong baht should have little effect on property other than townhomes or condos specifically marketed at farangs. The Thai economy is performing better that the US and most

of Europe so the expectation would be that the property market would begin to head up. Anecdotally, I have heard the the property market in Hua Hin and Cha am was heating up, but with only Thai buyers.

There is a glut of property in Hua Hin especially new builds and they are still building like crazy and still asking crazy money, am very glad I am not involved as I am sure many developers are going to get burned. also a lot of vacant rentals and prices are coming down , many local landlords are desperate. Fact not fiction.

[Krungbin]

Not a too clever question!

We are in Thailand and a baht remains a baht, regardless wherever from you may come...

[PattayaParent]

Since foreigners cannot own land, the strong baht should have little effect on property other than townhomes or condos specifically marketed at farangs. The Thai economy is performing better that the US and most

of Europe so the expectation would be that the property market would begin to head up. Anecdotally, I have heard the the property market in Hua Hin and Cha am was heating up, but with only Thai buyers.

A lot of Farangs buy land in company names, or buy it in their wife / gf names.

The strong Baht might make some think twice about this now.

Edit: also prices of imported raw / building materials will increase making construction costs for new build more expensive.

Edited September 17, 2010 by PattayaParent

[Stjohnm]

Since foreigners cannot own land, the strong baht should have little effect on property other than townhomes or condos specifically marketed at farangs. The Thai economy is performing better that the US and most

of Europe so the expectation would be that the property market would begin to head up. Anecdotally, I have heard the the property market in Hua Hin and Cha am was heating up, but with only Thai buyers.

A lot of Farangs buy land in company names, or buy it in their wife / gf names.

The strong Baht might make some think twice about this now.

Edit: also prices of imported raw / building materials will increase making construction costs for new build more expensive.

The Thai Government closed a loophole that allowed a Thai national to act as a proxy for Foreign buyers, this makes it even less an attractive investment, right now if you hold finds in a western currency I wouldn't consider Asian investments all the currencies of the region are fairly strong at the moment. Various governments will have to take measures to weaken their currency in order to aide their export market.

[Jingthing]

Probably not. If it would, it would be most apparent in markets dominated by foreign buyers. Pattaya. Here for every national with a weakened currency you also have a national with a strengthened currency. So wouldn't that just be a wash?

[ESB7]

Since foreigners cannot own land, the strong baht should have little effect on property other than townhomes or condos specifically marketed at farangs. The Thai economy is performing better that the US and most

of Europe so the expectation would be that the property market would begin to head up. Anecdotally, I have heard the the property market in Hua Hin and Cha am was heating up, but with only Thai buyers.

There is a glut of property in Hua Hin especially new builds and they are still building like crazy and still asking crazy money, am very glad I am not involved as I am sure many developers are going to get burned. also a lot of vacant rentals and prices are coming down , many local landlords are desperate. Fact not fiction.

Yes, fact not fiction but read coldmikes post...he is referring to the Thai market and buyers whereas you are referring to the market aimed at foreigners, all the gated communities and developments out Soi 112 etc are not selling/renting and probably never will even if the prices are slashed by 50%...Totally different story with stand alone properties and condos....look at the Boathouse, 80% sold to Thais..In the center on Petchkasem, 30mil Baht condos sold out..to Thais..Land in Cham is selling like there is no tomorrow but its all to Thais, just take a look in Cha am land office, its packed everyday with buyers/sellers.....3 plots opposite me just sold for between 4-6mil...to Thais..The Life on Petchkasem is almost sold out..to Thais yet Ban Tawan targeting foreigners has hardly sold any in over 3 years. 1.5 Rai on the beach a few hundred yards from where I live has just sold for 50mil...to a Thai...it makes sense that with a few hundred tousand foreingers and yet over 65 million Thais that the best market to target is the domestic...

[Naam]

The Thai Government closed a loophole that allowed a Thai national to act as a proxy for Foreign buyers, this makes it even less an attractive investment, right now if you hold finds in a western currency I wouldn't consider Asian investments all the currencies of the region are fairly strong at the moment. Various governments will have to take measures to weaken their currency in order to aide their export market.

a rather easy task to accomplish. there is a switch on every Mr. Government's desk which has three positions. "strengthen, keep neutral, weaken currency". all what Mr. Government has to do is flip the switch to the desired position.

[bubblehead]

There are good deals to be had with falangs selling up and returning to their home countries and exchanging baht for dollars, euros or pounds.

[parallaxtech]

Yes, fact not fiction but read coldmikes post...he is referring to the Thai market and buyers whereas you are referring to the market aimed at foreigners, all the gated communities and developments out Soi 112 etc are not selling/renting and probably never will even if the prices are slashed by 50%...Totally different story with stand alone properties and condos....look at the Boathouse, 80% sold to Thais..In the center on Petchkasem, 30mil Baht condos sold out..to Thais..Land in Cham is selling like there is no tomorrow but its all to Thais, just take a look in Cha am land office, its packed everyday with buyers/sellers.....3 plots opposite me just sold for between 4-6mil...to Thais..The Life on Petchkasem is almost sold out..to Thais yet Ban Tawan targeting foreigners has hardly sold any in over 3 years. 1.5 Rai on the beach a few hundred yards from where I live has just sold for 50mil...to a Thai...it makes sense that with a few hundred tousand foreingers and yet over 65 million Thais that the best market to target is the domestic...

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I live on Koh Samui and can tell you that 99% of the Thais live in a 3K/mos apt with ten others. The only Thais I know who can afford the prices you mention are mainly the mafia, police, and gov't officials. Seventy-five percent of the island was already purchased by farangs, but sales have probably dropped 90% since 2007. However, developers are still building all over and Thais are asking 20% more each year for land. A Thai who has inherited the land can simply wait until one day a gullible buyer arrives. Many farangs facing financial hardship have lowered their prices drastically in order to sell. Most farangs here with money will not buy from a Thai, so simply wait for a distressed property advertised by a farang.

Note: These are just my observations from living here for six years and figures are not documented, plus I am not involved in real estate sales, so maybe somebody has some non-biased real figures.

[12DrinkMore]

A lot of Farangs buy land in company names, or buy it in their wife / gf names.

The strong Baht might make some think twice about this now.

Edit: also prices of imported raw / building materials will increase making construction costs for new build more expensive.

The company route is becoming more difficult.

And if the THB strengthens then the price of imported stuff becomes cheaper, so I am not sure what you mean regarding raw materials.

But, IMO, if you haven't lived in Thailand for a substantial period, say a minimum of five years, just rent. Leave all your western dreams of "I must own the dirt under my feet" behind in the west where they belong.

[PattayaParent]

^yes the comapny route is 'becoming more difficult' but there are still people going that route, and agents / developrs pushing it.

And you're right about current imports becoming cheaper, but the new build condos goinfg on the market today were priced 1~2 years ago at higher rates so will have no effect, although you might get some discounts say for 'free' AC, kitchen etc..

Future build will have more risk built in.

Either way sales price doesn't change.

[Naam]

The company route is becoming more difficult.

And if the THB strengthens then the price of imported stuff becomes cheaper, so I am not sure what you mean regarding raw materials.

But, IMO, if you haven't lived in Thailand for a substantial period, say a minimum of five years, just rent. Leave all your western dreams of "I must own the dirt under my feet" behind in the west where they belong.

you forget Thai economics!

-if THB strengthens vs. all other currencies by 10% then raise prices of imported goods by 20%.

-if THB weakens vs. all other currencies by 10% then raise prices of imported goods by 25%.

-if business is slow then RAISE prices.

-if you can't sell your home for 10 million, increase price to 12.5 million.

[Lancelot]

you forget Thai economics!

-if THB strengthens vs. all other currencies by 10% then raise prices of imported goods by 20%.

-if THB weakens vs. all other currencies by 10% then raise prices of imported goods by 25%.

-if business is slow then RAISE prices.

-if you can't sell your home for 10 million, increase price to 12.5 million.

Well, if I am the seller, I'm all for Thai economics. Where do I sign up? :D:D

PS-But I'm always the buyer...