What Causes Propert Prices To Change

[trogers]

Here is an interesting Nov 2008 article, over a year after the bubble burst in the US:

Asian American home ownership experienced breakneck growth from 2000 to 2005' date=' leaping from 53 percent to 60 percent in five years. This growth rate outpaced that of every other ethnic group in the country over the same time period and would appear to signal a healthy appetite for home purchases at precisely the wrong time. And yet, something changed in 2006. According to a 2007 report on minority lending by Compliance Technologies Inc. and Genworth Financial, home buying among Asian Americans dropped a stunning 21.5 percent in a single year. After five years of relentless buying, new home ownership among Asian Americans quickly slowed right before the housing market burst.

[/quote']

http://www.asianweek...rtgage-fallout/

Edited April 15, 2011 by trogers

[trogers]

Contrast this situation with people in East/Southeast Asia.

East/Southeast Asia in general terms terms is 'B'

As I stated you really have to analyze on a location by location basis .I would not refer to the whole of East/Southeast Asia as one homogeneous location with respect to property prices

The culture of the Chinese, Japanese and Koreans places home ownership as a major sign of financial stability, ahead of car ownership.

Whereas the culture of Thailand places more importance on car ownership than home ownership.

And this is why local co-owners of condo units are mainly Thai-Chinese, even though they are a minority of the population.

[johnnyk]

Supply and demand...

JH

Supply and demand of what. Sentiment or Money?

In UK and USA there is a plentiful of supply of housing stock and there is plenty of demand i.e. The public interest to own a house has not diminished.

And yet transactions are below historical norms.

Your statement does not explain anything

Oversupply of housing in the US, too much built on spec for sale to sub-prime customers (those who can't afford it).

Banks aren't throwing $$$ at people any more. They aren't lending.

Near-20% unemployment does dampen spirits a bit. BTW, the near-20% figure is counting the way Reagan counted it when he arrived. Like Thatcher, his regime changed the calculation to mask the true debacle.

Edited April 15, 2011 by johnnyk

[Delight]

Supply and demand...

JH

Supply and demand of what. Sentiment or Money?

In UK and USA there is a plentiful of supply of housing stock and there is plenty of demand i.e. The public interest to own a house has not diminished.

And yet transactions are below historical norms.

Your statement does not explain anything

Oversupply of housing in the US, too much built on spec for sale to sub-prime customers (those who can't afford it).

Banks aren't throwing $ at people any more. They aren't lending.

Near-20% unemployment does dampen spirits a bit. BTW, the near-20% figure is counting the way Reagan counted it when he arrived. Like Thatcher, his regime changed the calculation to mask the true debacle.

What you are describing is a 'A' Scenario

Prior to 'A ' you will always have a 'C'

Q What caused the 'C' ie Boom -describe the situation at the very start.

[trogers]

Oversupply of housing in the US, too much built on spec for sale to sub-prime customers (those who can't afford it).

Banks aren't throwing $ at people any more. They aren't lending.

Near-20% unemployment does dampen spirits a bit. BTW, the near-20% figure is counting the way Reagan counted it when he arrived. Like Thatcher, his regime changed the calculation to mask the true debacle.

What you are describing is a 'A' Scenario

Prior to 'A ' you will always have a 'C'

Q What caused the 'C' ie Boom -describe the situation at the very start.

Mechanisms that trigger a boom-bust cycle:

1. A spike in demand sees an unusual jump in housing prices because supply will always lag 12-24 months behind due to the time taken to construct new stock.

2. Other factors in the economy pile in to increase demand - higher economic growth, wealth effect from a growing stock market, easing of financial terms and low interest rates, etc.

3. Price of housing increasing to double digits leading to speculative demand (ie. demand from speculators and not home owners), fueling even higher demand.

4. Brokers, financiers, developers, and contractors jump in hoping to make their bundles.

5. The vicious cycle may continue for a further few years until the bubble is burst by some external shock.

6. And prices spiral down a few years after the burst as new stock is being completed and remain vacant.

[Delight]

Oversupply of housing in the US, too much built on spec for sale to sub-prime customers (those who can't afford it).

Banks aren't throwing $ at people any more. They aren't lending.

Near-20% unemployment does dampen spirits a bit. BTW, the near-20% figure is counting the way Reagan counted it when he arrived. Like Thatcher, his regime changed the calculation to mask the true debacle.

What you are describing is a 'A' Scenario

Prior to 'A ' you will always have a 'C'

Q What caused the 'C' ie Boom -describe the situation at the very start.

Mechanisms that trigger a boom-bust cycle:

1. A spike in demand sees an unusual jump in housing prices because supply will always lag 12-24 months behind due to the time taken to construct new stock.

2. Other factors in the economy pile in to increase demand - higher economic growth, wealth effect from a growing stock market, easing of financial terms and low interest rates, etc.

3. Price of housing increasing to double digits leading to speculative demand (ie. demand from speculators and not home owners), fueling even higher demand.

4. Brokers, financiers, developers, and contractors jump in hoping to make their bundles.

5. The vicious cycle may continue for a further few years until the bubble is burst by some external shock.

6. And prices spiral down a few years after the burst as new stock is being completed and remain vacant.

Excellent Post

I have 2 q,s -Particular to the recent US boom /Bust

Q1 What event caused Point 1 on your list

Q2 What was the external shock as referred to on item 5 on your list

[trogers]

Oversupply of housing in the US, too much built on spec for sale to sub-prime customers (those who can't afford it).

Banks aren't throwing $ at people any more. They aren't lending.

Near-20% unemployment does dampen spirits a bit. BTW, the near-20% figure is counting the way Reagan counted it when he arrived. Like Thatcher, his regime changed the calculation to mask the true debacle.

What you are describing is a 'A' Scenario

Prior to 'A ' you will always have a 'C'

Q What caused the 'C' ie Boom -describe the situation at the very start.

Mechanisms that trigger a boom-bust cycle:

1. A spike in demand sees an unusual jump in housing prices because supply will always lag 12-24 months behind due to the time taken to construct new stock.

2. Other factors in the economy pile in to increase demand - higher economic growth, wealth effect from a growing stock market, easing of financial terms and low interest rates, etc.

3. Price of housing increasing to double digits leading to speculative demand (ie. demand from speculators and not home owners), fueling even higher demand.

4. Brokers, financiers, developers, and contractors jump in hoping to make their bundles.

5. The vicious cycle may continue for a further few years until the bubble is burst by some external shock.

6. And prices spiral down a few years after the burst as new stock is being completed and remain vacant.

Excellent Post

I have 2 q,s -Particular to the recent US boom /Bust

Q1 What event caused Point 1 on your list

Q2 What was the external shock as referred to on item 5 on your list

I have not done any study into the US case, but from general reading, my guess is point 1 resulted from wealth diverting from the stock market. Recall the stock market 'New Economy' stocks burst in late March 2000, and as a result, the Feds pushed interest rates down leading to point 2.

Point 5 is understood to be from non-payments by sub-prime lenders. The housing market did not burst first. It was the stock prices of the financiers that first took the dive.

[Delight]

Q What caused the 'C' ie Boom -describe the situation at the very start.

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Mechanisms that trigger a boom-bust cycle:

1. A spike in demand sees an unusual jump in housing prices because supply will always lag 12-24 months behind due to the time taken to construct new stock.

2. Other factors in the economy pile in to increase demand - higher economic growth, wealth effect from a growing stock market, easing of financial terms and low interest rates, etc.

3. Price of housing increasing to double digits leading to speculative demand (ie. demand from speculators and not home owners), fueling even higher demand.

4. Brokers, financiers, developers, and contractors jump in hoping to make their bundles.

5. The vicious cycle may continue for a further few years until the bubble is burst by some external shock.

6. And prices spiral down a few years after the burst as new stock is being completed and remain vacant.

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Excellent Post

I have 2 q,s -Particular to the recent US boom /Bust

Q1 What event caused Point 1 on your list

Q2 What was the external shock as referred to on item 5 on your list

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

I have not done any study into the US case, but from general reading, my guess is point 1 resulted from wealth diverting from the stock market. Recall the stock market 'New Economy' stocks burst in late March 2000, and as a result, the Feds pushed interest rates down leading to point 2.

Point 5 is understood to be from non-payments by sub-prime lenders. The housing market did not burst first. It was the stock prices of the financiers that first took the dive.

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Your opinion is just as valid as mine -or the opinion anybody else for that matter

Just for interest I will compare yours with mine

Q What caused the housing boom

Opinion of trogers

'I have not done any study into the US case, but from general reading, my guess is point 1 resulted from wealth diverting from the stock market. Recall the stock market 'New Economy' stocks burst in late March 2000, and as a result, the Feds pushed interest rates down leading to point 2.'

Opinion of delight

Former Federal Reserve Board Chairman Alan Greenspan admitted that the housing bubble was ''fundamentally engendered by the decline in real long-term interest rates''

Essentially the same view -except that I believe that that the decline in rates was as a consequence of a political initiative by Bush to get make low earners into house owners

Trogers (if i am reading his post correctly) thinks that it was caused by finance looking for a home

What causes the boom to end

Opinion of trogers

''Point 5 is understood to be from non-payments by sub-prime lenders. The housing market did not burst first. It was the stock prices of the financiers that first took the dive.''

Opinion of delight

''Point 5 is understood to be from non-payment by sub -prime borrowers

We both agree about the decline in interest rates prior to the boom-I attach JPEG

Any more different opinions out there?

Edited April 16, 2011 by Delight

[Darrel]

When was it 40 Baht to 1 GBP?

Pre 1997 crash, see the following links,

Hmm. Glad I missed those few years here. That was really over-valued.

I dont think that I have even known it lower than it is now at 49, and mostly I remember it at 60 - 70.

[PattayaParent]

I came at 40 to the Quid

When was it 40 Baht to 1 GBP?

Pre 1997 crash, see the following links,

http://www.x-rates.c...P/hist1995.html

http://www.x-rates.c...P/hist1996.html

http://www.x-rates.c...P/hist1997.html

Like PP I regard anything over 40 as a bonus, and can remember seeing it as low as 36 in the early 90's.

I came in '94,and prices now in Quids/$$ term are still cheaper than then.

[pkrv]

You forgot FX when factoring in Thailand as a Farang.

Now that I understand your FX reference I will answer.

The post was not Thailand Specific.

However

FX will impact both Supply of money and Sentiment. The only 2 variables in the post

Thus it does not require to be a stated 3rd variable

Of course it could have no impact for a farang if he is simply buying and selling in the same market and specifically not going up -market

Property (condominiums in Thailand) is now a global issue - Thais are now buying in the UK - FX is a massive factor.

I fail to understand your position -or maybe I have not explained the variables

Money supply. This is no more than what is says-Access to funds

Sentiment is the process that factors in all the financial ,emotional and practical issues that will give a' YES 'or a 'NO' to Q 1 Shall I/we buy and then potentially Q2 Where/What shall I /we buy

I think FX issues are represented(if appropriate) somewhere in this process

Look its dead simple you leverage a strong currency into a weak market - buy low sell high - this expression is a part of our language. So whilst a market may look weak (though there is always tat on the market - another issue entirely), these days, it probably isn't. People are growing up at a very fast pace due to global communications via the internet.

[Delight]

Look its dead simple you leverage a strong currency into a weak market - buy low sell high - this expression is a part of our language. So whilst a market may look weak (though there is always tat on the market - another issue entirely), these days, it probably isn't. People are growing up at a very fast pace due to global communications via the internet.

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Perhaps you could illustrate your analysis in a particular location and explain how was the FX directly caused a Boom Bust cycle in that local property market .

I could be wrong but in relation to Thailand the Aussie dollar buys more baht than it did say 5 years ago.

Have you seen an increase in property purchases by Australians ?

Edited April 20, 2011 by Delight

[thaiwanderer]

Perhaps you could illustrate your analysis in a particular location and explain how was the FX directly caused a Boom Bust cycle in that local property market .

Thailand 1997

[trogers]

Perhaps you could illustrate your analysis in a particular location and explain how was the FX directly caused a Boom Bust cycle in that local property market .

Thailand 1997

The property cycle in 1997 was busted by the external shock of FX. But FX was a sympton of a cause, and not the cause.

The cause was the fixed exchange rate of the Thai Baht. Domestic lending interest rates shot up above 15%pa (and over 23% at the height). Many corporates borrowed directly from overseas (through bonds sales or other means) as borrowing rates abroad were less than 12%pa. Overseas lenders felt no risk from exchange rates as it was then fixed, and thus lend at the usual rates.

When the exchange rate can no longer be fixed by the Bank of Thailand, all hell broke lose. Overseas lenders recalled their loans in large numbers, causing defaults on debts as income of these compaines were in Thai Baht, which depreciated against other currencies. And thus the start of the Tom Yum Kung crisis.

[Delight]

Perhaps you could illustrate your analysis in a particular location and explain how was the FX directly caused a Boom Bust cycle in that local property market .

Thailand 1997

The property cycle in 1997 was busted by the external shock of FX. But FX was a sympton of a cause, and not the cause.

The cause was the fixed exchange rate of the Thai Baht. Domestic lending interest rates shot up above 15%pa (and over 23% at the height). Many corporates borrowed directly from overseas (through bonds sales or other means) as borrowing rates abroad were less than 12%pa. Overseas lenders felt no risk from exchange rates as it was then fixed, and thus lend at the usual rates.

When the exchange rate can no longer be fixed by the Bank of Thailand, all hell broke lose. Overseas lenders recalled their loans in large numbers, causing defaults on debts as income of these compaines were in Thai Baht, which depreciated against other currencies. And thus the start of the Tom Yum Kung crisis.

Am I correct in thinking that in 1980 when 25 baht bought a dollar the property market was in boom. In 1997 when one dollar would buy 56 Baht the property market was in bust.

If I am correct (and please correct me If I am wrong) then the relationship ie dollar /baht brought about an inverse relationship to that typical of more modern times.Properties became cheaper in dollar terms but still demand waned.

So in 1980 at 25 -Boom 2011 at 30 no Boom

I suspect that factors external to the property market caused the general slump. property was an effect -not a cause. Unlike the recent situation in US and UK and Ireland and Spain etc.

Just to remind readers the post was 'Causes that create Boom/Bust cycles'

[trogers]

Perhaps you could illustrate your analysis in a particular location and explain how was the FX directly caused a Boom Bust cycle in that local property market .

Thailand 1997

The property cycle in 1997 was busted by the external shock of FX. But FX was a sympton of a cause, and not the cause.

The cause was the fixed exchange rate of the Thai Baht. Domestic lending interest rates shot up above 15%pa (and over 23% at the height). Many corporates borrowed directly from overseas (through bonds sales or other means) as borrowing rates abroad were less than 12%pa. Overseas lenders felt no risk from exchange rates as it was then fixed, and thus lend at the usual rates.

When the exchange rate can no longer be fixed by the Bank of Thailand, all hell broke lose. Overseas lenders recalled their loans in large numbers, causing defaults on debts as income of these compaines were in Thai Baht, which depreciated against other currencies. And thus the start of the Tom Yum Kung crisis.

Am I correct in thinking that in 1980 when 25 baht bought a dollar the property market was in boom. In 1997 when one dollar would buy 56 Baht the property market was in bust.

If I am correct (and please correct me If I am wrong) then the relationship ie dollar /baht brought about an inverse relationship to that typical of more modern times.Properties became cheaper in dollar terms but still demand waned.

So in 1980 at 25 -Boom 2011 at 30 no Boom

I suspect that factors external to the property market caused the general slump. property was an effect -not a cause. Unlike the recent situation in US and UK and Ireland and Spain etc.

Just to remind readers the post was 'Causes that create Boom/Bust cycles'

The reason why domestic interest rates climbed so high then was the great big asset bubble - not just real estate. During the bust period, Benz, BMW and Rolex watches were being sold along Soi Thonglor like a weekend market.

Demand for condo waned largely because locals did not have the finance to hold that 51%.

[Delight]

[

Am I correct in thinking that in 1980 when 25 baht bought a dollar the property market was in boom. In 1997 when one dollar would buy 56 Baht the property market was in bust.

If I am correct (and please correct me If I am wrong) then the relationship ie dollar /baht brought about an inverse relationship to that typical of more modern times.Properties became cheaper in dollar terms but still demand waned.

So in 1980 at 25 -Boom 2011 at 30 no Boom

I suspect that factors external to the property market caused the general slump. property was an effect -not a cause. Unlike the recent situation in US and UK and Ireland and Spain etc.

Just to remind readers the post was 'Causes that create Boom/Bust cycles'

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The reason why domestic interest rates climbed so high then was the great big asset bubble - not just real estate. During the bust period, Benz, BMW and Rolex watches were being sold along Soi Thonglor like a weekend market.

Demand for condo waned largely because locals did not have the finance to hold that 51%.

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Precisely

As I said at the beginning of this post . The 2 variables are

1 Money Supply

2 Sentiment

FX in isolation is not a factor

Edited April 21, 2011 by Delight

[pkrv]

OK I agree with many of the comments. But for different reasons:

1) There appear to be only about 50,000 Farang quota condominiums in Bangkok - we are small fry - our impact is negligible. We are not going to be able to measure this. I have no idea of the size of the Australian contingent maybe hundreds? no idea.

http://www.siam-legal.com/realestate/Condominium-Rights-in-Thailand.php

2) yes in a meltdown people will sell assets; it depends on which country is melting down and where your long term aspirations are. One of the first things to go can be the 'holiday home' - however it could be a make or break choice for a life style decision and the primary home could be sold.

3) Yes the 49/51 % rule does cause complications - I am on record as saying I have never liked it.

4) If you think people do not take advantage of a 50% movement in the price for their property (condominiums in Thailand), in their home currency and there is anecdotal evidence that UK people did so in Patthaya (sorry I could probably dig out the thread but it would be hard work) you must be mad.

5) Why is it do you think that the FETF specifically states the exchange rate you received?

http://www.bot.or.th/Thai/ForeignExchangeRegulations/Report%20Form/Report/FX_TranForm.doc

does this help?

Edited April 21, 2011 by pkrv

[pkrv]

Perhaps you could illustrate your analysis in a particular location and explain how was the FX directly caused a Boom Bust cycle in that local property market .

Thailand 1997

The property cycle in 1997 was busted by the external shock of FX. But FX was a sympton of a cause, and not the cause.

The cause was the fixed exchange rate of the Thai Baht. Domestic lending interest rates shot up above 15%pa (and over 23% at the height). Many corporates borrowed directly from overseas (through bonds sales or other means) as borrowing rates abroad were less than 12%pa. Overseas lenders felt no risk from exchange rates as it was then fixed, and thus lend at the usual rates.

When the exchange rate can no longer be fixed by the Bank of Thailand, all hell broke lose. Overseas lenders recalled their loans in large numbers, causing defaults on debts as income of these compaines were in Thai Baht, which depreciated against other currencies. And thus the start of the Tom Yum Kung crisis.

Hi trogers,

FX underlines the cost of eggs, chicken wings, pork bellies (and yes pork bellies was a neutral topic to include in Reuters data feed manuals) though to derivatives/synthetic instruments.

FX underlines everything - That Thailand messed about with it - caused the problem - all predators pounced simultaneously.

[Delight]

Delight 's response to a post from pkrv

1) There appear to be only about 50,000 Farang quota condominiums in Bangkok - we are small fry - our impact is negligible. We are not going to be able to measure this. I have no idea of the size of the Australian contingent maybe hundreds? – no idea.

I conclude from that comment that in relation to demand in Bangkok total then FX has virtually no impact.

2) yes in a meltdown people will sell assets; it depends on which country is melting down and where your long term aspirations are. One of the first things to go can be the 'holiday home' - however it could be a make or break choice for a life style decision and the primary home could be sold.

You are talking about Sentiment. Sentiment has a linear impact on demand to purchase /sell property. I stated this at the beginning

3) Yes the 49/51 % rule does cause complications - I am on record as saying I have never liked it.

I think that it was designed to appeal to Kon Thai -not to Farang

It does have a negative impact on Sentiment with the latter.

4) If you think people do not take advantage of a 50% movement in the price for their property (condominiums in Thailand), in their home currency and there is anecdotal evidence that UK people did so in Patthaya (sorry I could probably dig out the thread but it would be hard work) you must be mad.

Pattaya is a better example of the impact of FX than say Bangkok. Pattaya as you know is a Farang town

There are more condos(as measured by square meters) being built and sold with Thai Baht/US Dollar at 30 in Pattaya than were ever sold at 40.

If FX was a linear factor then the opposite would be true.

In the eyes of new buyers 30 is the new and acceptable norm(I presume)

What's now is now –what happened before is irrelevant.

Even at 30 Thailand is cheaper than alternative locations

And given that Thailand has not seen a major Boom/Bust(such as Spain and Ireland)

then condo sales continue. Sentiment is good.

Markets are always in a state of flux. Large and very large condos in Pattaya are slow to sell.

5 /6 years ago they sold like hot cakes. Not so now.

The market has adjusted , so smaller sized condos are the order of the day.

Those who want large condos are, in the main, staying away – presumably they cannot justify the price.

Enter stage left those who can justify the purchase of smaller condos.

It would appear that the rise in the Thai baht has exposed a market that was not visible before.

Therefore the nett result of the appreciation of the Baht has served to increase the demand for condos.(as measured by sq.M)

FX considerations can suppress demand (as I think you have implied thru your entire posts ) or can have the impact to stimulate demand(as I think you have not considered)

If 5 years time that could all change again.

Maybe in 15 years time you will not be able to give small condos away.

Who knows –for sure not me

Of course FX affects price and that is included in Sentiment.

You will recall that Sentiment had 3 elements :

a Money (I did not call it 'Price ' because many people buy to sell. The price may well be irrelevant. Their desire to make profit will the determine whether Sentiment is High or Low).

Price for those buyers who buy to use will of course be important.

b Emotions – Happiness versus Fear. Fear is always a factor when purchasing property

c Practical issues. Local services ,job change etc.

House (in Pattaya) sales are a different story .The emotional element of Sentiment (ie Fear) is keeping the buyers away.

Fear associated with Land issues –not FX issues.

I think that I have stated on more than one occasion that the post was intended for comments in terms of activity global –not parochial .

I would ask you to remove your parochial blinkers and give this post your thoughts on say

The causes of Boom /Bust in say USA

Edited April 21, 2011 by Delight

[pkrv]

The post was not Thailand Specific.

Hmm I think that one thew me off...

In general all things will balance themselves out.... eventually...

Edited April 21, 2011 by pkrv

[pkrv]

There are more condos(as measured by square meters) being built and sold with Thai Baht/US Dollar at 30 in Pattaya than were ever sold at 40.

Ummm.... are you a developer/estate agent?

I mean what link will you provide to prove this? I'm not great at this but I do try to do my best.

[pkrv]

FX considerations can suppress demand (as I think you have implied thru your entire posts ) or can have the impact to stimulate demand(as I think you have not considered)

I err... bought at 75 THB to GBP are you suggesting I now buy at 48/9 THB to GBP?

Edited April 21, 2011 by pkrv

[Delight]

FX considerations can suppress demand (as I think you have implied thru your entire posts ) or can have the impact to stimulate demand(as I think you have not considered)

I err... bought at 75 THB to GBP are you suggesting I now buy at 48/9 THB to GBP?

If you can buy right now at 75 then :-

1 Continue to buy

2 supply me the name of your supplier.

Or is your thinking just a triumph of fantasy over reality.

I suspect that it is.

Prior to that are you in a position to offer a make a contribution to this post that ignores FX?

I'm looking for a YES or a NO

[Delight]

There are more condos(as measured by square meters) being built and sold with Thai Baht/US Dollar at 30 in Pattaya than were ever sold at 40.

Ummm.... are you a developer/estate agent?

I mean what link will you provide to prove this? I'm not great at this but I do try to do my best.

Neither -just a person who is interested or even fascinated at the ways that markets work.

Particularly in the fact that since year 2000 the number of well respected (respected at the time) top financial government men staked there reputations by claiming that property Boom /Bust cylces were gone forever.

2 names come to mind:-

1) Gordon Brown -then Chancellor of the UK exchequer

2Alan Greenspan -then Chairman of the Fed.

Both claimed that they had an insight to the future -both got it wrong.

The diabolical truth is that once a Boom has gathered some momentum -they are impossible to stop. Unique I think to property. They are like avalanches.

If they apply regular Monetary Policy devices ie increase interest rates -certainly they end the Boom -However there is a good chance that they will wreck the economy total

The behavior of property prices can get out of control. That said there may be ways to stop the boom from occurring

I suspect that they do not see property as a special case. I am not saying that it is. It just appears that way

Reference proof of sales in Pattaya

One site is The Cliff Pattaya 426 rooms 70% sold

You will need to scrutinize other sites floor by floor- A bit boring

That is not to say they are all as successful. Those developers who did not spot the change in the market are suffering(large condos are out)-That need to anticipate change of course applies to all markets.

I recognize that I may be an odd ball . Most Farang in Pattaya only talk about beer and pussy.

Edited April 21, 2011 by Delight

[SolarOhm]

When there are correlations it does not mean one event causes the other - they could both be caused by a third or more external facors.

Property prices are determined by buyers and sellers agreeing on figures. FX is largely irrelevant except for the fact that Overseas investors might be attracted by having more real purchasing power in their poclets than locals. However unless they hedge against adverse currency moves what might have been a bubble will certainly be a pop.

Property prices are more a reflection of the economic condition of the country itself - which can be relayed to FX markets. An appreciating local currency not a decline will encourage property prices to move up not down.

When the Baht fell to 50 (against the USD) property in Thailand was almost worthless - there was a currency crisis and over-building. As the Thai economy recovered property prices moved up. FX changes reflected the improved economic condition of Thailand. It did not in itself cause property prices to rise!

Edited July 14, 2011 by SolarOhm

[davejones]

Availability of mortgages and interest rates are the biggest drivers of property prices. When banks are practically giving money away at very low interest rates then everyone wants to buy property. And why wouldn't they, as the costs are ridiculously low and a boom is bound to follow.

Confidence in the market can also have a big effect.

New infrastructure can drive prices up e.g. new tube station in London, new BTS line in BKK.

[trogers]

Availability of mortgages and interest rates are the biggest drivers of property prices. When banks are practically giving money away at very low interest rates then everyone wants to buy property. And why wouldn't they, as the costs are ridiculously low and a boom is bound to follow.

Ask those US sub-primer borrowers if they will still sign on the loan agreements if they can reverse time back to the start...

A boom followed all right, and then a mighty big bang thereafter. Where is Lehman Brothers now?

[davejones]

Availability of mortgages and interest rates are the biggest drivers of property prices. When banks are practically giving money away at very low interest rates then everyone wants to buy property. And why wouldn't they, as the costs are ridiculously low and a boom is bound to follow.

Ask those US sub-primer borrowers if they will still sign on the loan agreements if they can reverse time back to the start...

A boom followed all right, and then a mighty big bang thereafter. Where is Lehman Brothers now?

Yes, I agree, a bust follows after a boom. The trick is to get out before the bust. Too many buy at the very end of the boom. You can usually tell where to buy. When no-one is buying, then it is usually near the bottom. When everyone is buying, especially people who shouldn't be, then you can be pretty sure the top is very close.

We will always have booms and busts, so follow them and there is big money to be made.