Is The Pattaya Property Bubble Going To Burst?

[thenervoussurgeon]

Well not only ours but Thailands in general ,that seems to be the consensus of many of the financial institutions . when we started looking for a place to live 8 years ago ,there were so many empty places ,(many still are) and they seem to be growing all the time , but building just goes on and on ,and please dont tell me its the rich Russians that are buying ,they do ,but nowhere in the numbers that places are being built .on our estate ,houses have been empty for years ,the few that have sold have gone for the same ,or less than they were originally ,the developer ,built 14 new houses 3 years ago ,one has been sold or rented ,another 10 are half finished and have been for two years .

so is this the norm is the bubble going to burst just like 1997 and as it did in the west in 2008?

[BlackPuddingBertha]

I know nothing about houses here (and I dont want to) but for Pattaya condos it is surely just a question of time.

[Jingthing]

What bubble? A condo I had in the U.S. tripled in price in 8 years. A condo I bought in Jomtien is worth about the same thing in 8 years. Again, what bubble?

Edited March 3, 2013 by Jingthing

[LennyW]

As long as money needs to be laundered - the building will continue.

[thenervoussurgeon]

As long as money needs to be laundered - the building will continue.

The financial institutions ,also Bloomberg and Reuters seem to think its the banks funding it with cheap loans.

as for condoes in Jomtien not going up in price ,tell that to Thais who seem to think they have and there are so many unsold or baught as investments ,that no one wants to buy.

[OMGImInPattaya]

What bubble? A condo I had in the U.S. tripled in price in 8 years. A condo I bought in Jomtien is worth about the same thing in 8 years. Again, what bubble?

Exactly...I know farangs who "invested" in condos years ago on "the hill" and they have been for sale for 3-4 years now with no takers...even for less than originally paid (which was inflated to begin with).

[craigt3365]

The lower end condos are selling like hot cakes. I've been to a few and the places had a steady stream of prospects. A lot of Russians buying basically hotel rooms for under 1MM Baht. Also seems to be quite a few Thais from BKK looking for weekend getaways (or flood getaways?).

As for houses, our village is sold out. No rentals available and we get many lookers every week. A few are for sale, but not many. Two are asking ridiculous prices...so doubt they will sell any time soon. No different than in many other places in the world. If priced properly, they'll sell.

I don't see price appreciation at all. But with 2.2 million Russians visiting a year, and growing, the demand is there.

A bubble? Perhaps. Price stagnation? For sure.

[jbrain]

What bubble? A condo I had in the U.S. tripled in price in 8 years. A condo I bought in Jomtien is worth about the same thing in 8 years. Again, what bubble?

Isn't that a clear sign that the market has been saturated for the past 8 years ?

Logically when a market is saturated and they keep building a bubble is created.

[Jingthing]

What bubble? A condo I had in the U.S. tripled in price in 8 years. A condo I bought in Jomtien is worth about the same thing in 8 years. Again, what bubble?

Isn't that a clear sign that the market has been saturated for the past 8 years ?

Logically when a market is saturated and they keep building a bubble is created.

I'm thinking more of a classic price bubble, like the tulip bulb bubble in Holland. MASSIVE price inflation, then a MASSIVE crash. No massive price inflation ... so no crash. My condo here never inflated in the first place. I see we're talking about different definitions of bubbles.

Edited March 3, 2013 by Jingthing

[tontraveller]

Soon the Bankokians who wants to buy here are saturated..

Then we see a lot of discounts coming up for these thousands of 30 sq meter condos..

Because I think few expats wants to live in these chicken-boxes permanently...

[Jingthing]

Soon the Bankokians who wants to buy here are saturated..

Then we see a lot of discounts coming up for these thousands of 30 sq meter condos..

Because I think few expats wants to live in these chicken-boxes permanently...

Oh please. I've got 74 sq. meters. Imagine what that would cost in Manhattan or Tokyo and how many people would want to live in such a "chicken box" in those places. This is a city. It is urbanized. People live in small spaces in cities.

[LeCharivari]

This isn't Manhattan or Tokyo - its Pattaya. Some people seem to forget that when making comparisons.

[TommoPhysicist]

As long as money needs to be laundered - the building will continue.

The financial institutions ,also Bloomberg and Reuters seem to think its the banks funding it with cheap loans.

as for condoes in Jomtien not going up in price ,tell that to Thais who seem to think they have and there are so many unsold or baught as investments ,that no one wants to buy.

I don't consider 6.25% a cheap loan.

[Jingthing]

This isn't Manhattan or Tokyo - its Pattaya. Some people seem to forget that when making comparisons.

Indeed. And small condos are WAY CHEAPER here because it isn't those places. But they are all urbanized, densely populated places now, thus that comparison is valid.

Bottom line, some people like cities, some people like suburbs, some people like country. If you're living in a city, most people are going to be living in smaller spaces.

Edited March 3, 2013 by Jingthing

[thenervoussurgeon]

Soon the Bankokians who wants to buy here are saturated..

Then we see a lot of discounts coming up for these thousands of 30 sq meter condos..

Because I think few expats wants to live in these chicken-boxes permanently...

Oh please. I've got 74 sq. meters. Imagine what that would cost in Manhattan or Tokyo and how many people would want to live in such a "chicken box" in those places. This is a city. It is urbanized. People live in small spaces in cities.

Sorry this is not meant as a dig at you ,but the thought of coming to Pattaya and ending my days in a box(no pun intended) would fill me with dread ,however if i was making my way in the world in say Mayfair in London i wouldnt mind spending a few years living in a 74 sq metre box ,no problem there or then ,

[thenervoussurgeon]

As long as money needs to be laundered - the building will continue.

The financial institutions ,also Bloomberg and Reuters seem to think its the banks funding it with cheap loans.

as for condoes in Jomtien not going up in price ,tell that to Thais who seem to think they have and there are so many unsold or baught as investments ,that no one wants to buy.

I don't consider 6.25% a cheap loan.

6.25% OR 2% makes no differance if it does not get paid back ,the bank is still in the poo.

[Jingthing]

Soon the Bankokians who wants to buy here are saturated..

Then we see a lot of discounts coming up for these thousands of 30 sq meter condos..

Because I think few expats wants to live in these chicken-boxes permanently...

Oh please. I've got 74 sq. meters. Imagine what that would cost in Manhattan or Tokyo and how many people would want to live in such a "chicken box" in those places. This is a city. It is urbanized. People live in small spaces in cities.

Sorry this is not meant as a dig at you ,but the thought of coming to Pattaya and ending my days in a box(no pun intended) would fill me with dread ,however if i was making my way in the world in say Mayfair in London i wouldnt mind spending a few years living in a 74 sq metre box ,no problem there or then ,

So what's your point? People are different. That's my point.

On prices, yes I think condo prices in town have softened. Have they crashed? No. Will they crash? No. Again, for something to crash it has to soar first. They never soared here.

Edited March 3, 2013 by Jingthing

[Thailaw]

What bubble? A condo I had in the U.S. tripled in price in 8 years. A condo I bought in Jomtien is worth about the same thing in 8 years. Again, what bubble?

Isn't that a clear sign that the market has been saturated for the past 8 years ?

Logically when a market is saturated and they keep building a bubble is created.

I'm thinking more of a classic price bubble, like the tulip bulb bubble in Holland. MASSIVE price inflation, then a MASSIVE crash. No massive price inflation ... so no crash. My condo here never inflated in the first place. I see we're talking about different definitions of bubbles.

Your's is the correct (and really only) definition of a "housing bubble" -- really, a "housing price bubble". A housing price bubble is rapid increase in house prices, fueled by strong/growing demand, typically in excess of increases in supply, causing prices to rise. "Tulipomania" in Holland is a good analogy to the existence and bursting of a housing price bubble, as experienced in many cities in the US from 2003 to 2008 thanks to the US government, Ginnie Mae, and many profit hungry US banks. The reasons can be many -- easy credit, increasing incomes, poor government policies, among others. The reason that it is called a "bubble" is that, at some point, the forces that caused the price bubble will weaken, stop or possibly reverse and the "bubble will burst", causing house prices to fall as quickly as they rose. As JT says, there really has never been a "bubble" in the Pattaya housing market, which is probably a segmented market in any event, with a market for houses and a market for condos. Legal restrictions on land ownership may have a role to play in this market segmentation. The market for houses has been relatively weak in Pattaya since 2005. I don't see that changing (positively or negatively) any time soon. The condo market seems to be stronger, at least for new condos sold by developers. The secondary market for the sale of used condos has always been a more difficult proposition.

But nothing that has taken place in the condo market has the elements of a "housing price bubble" -- in fact, prices in Baht terms appear to have remained relatively stable over the past 5+ years. In Dollar, Pound or Euro terms, it is a different story. Might increases in condo supply at some point lead to price declines? It is certainly possible, but they won't be as dramatic as a "bursting bubble". There is a lot of speculation in the Pattaya housing market, and that implies risk taken for expected high returns. Particular condo projects may encounter problems and suffer price declines. But if you are expecting a Las Vegas-type situation (40% housing price declines) to arise in the Pattaya condo/house market(s), you will, I think, be very disappointed (or wait a very long time).

[thenervoussurgeon]

Thailaw

You are right ,i myself was not thinking of a rapid rise in prices then a drop ,more the oversupply of property ,far more condoes and houses being built than people to buy them , many of the condoes going up at the moment really are just boxes, i a see so many that come straight back on the market at inflated prices ,who will buy them?

Edited March 3, 2013 by thenervoussurgeon

[Jingthing]

There may be an oversupply of condos but at the right price probably most can be sold, especially to Bangkokians for weekends/flood relief units.

[jbrain]

There may be an oversupply of condos but at the right price probably most can be sold, especially to Bangkokians for weekends/flood relief units.

But JT, there will be no floods anymore.

You never listen to Yingluck's drivel announcements

[overherebc]

Thailaw

You are right ,i myself was not thinking of a rapid rise in prices then a drop ,more the oversupply of property ,far more condoes and houses being built than people to buy them , many of the condoes going up at the moment really are just boxes, i a see so many that come straight back on the market at inflated prices ,who will buy them?

Only once in my life have I lived in flat condo and will never do it again. Like many I just don't understand the reason for all the condo construction. It seems to go along on the same mind set of 10 7/11s on the same short Soi. One makes money, ie the first, so the next 9 will also make the same .

[thenervoussurgeon]

Yes i have never understood the Thai mindset ,there was a computer place near us where all the kids went to play games ,it was always busy ,in the last year three more have opened now none are busy ,same with a shop doing printing , within 6 months another opened within 50 yards . crazy ,it seems the same with condoes ,and to be honest i have friends in agencys here ,its not rich Bangkokians buying to escape flooding ,its a myth.

[toenail]

The lower end condos are selling like hot cakes. I've been to a few and the places had a steady stream of prospects. A lot of Russians buying basically hotel rooms for under 1MM Baht. Also seems to be quite a few Thais from BKK looking for weekend getaways (or flood getaways?).

As for houses, our village is sold out. No rentals available and we get many lookers every week. A few are for sale, but not many. Two are asking ridiculous prices...so doubt they will sell any time soon. No different than in many other places in the world. If priced properly, they'll sell.

I don't see price appreciation at all. But with 2.2 million Russians visiting a year, and growing, the demand is there.

A bubble? Perhaps. Price stagnation? For sure.

This guy must write those postive outlook articles in the Pattaya real estate magazines

[craigt3365]

The lower end condos are selling like hot cakes. I've been to a few and the places had a steady stream of prospects. A lot of Russians buying basically hotel rooms for under 1MM Baht. Also seems to be quite a few Thais from BKK looking for weekend getaways (or flood getaways?).

As for houses, our village is sold out. No rentals available and we get many lookers every week. A few are for sale, but not many. Two are asking ridiculous prices...so doubt they will sell any time soon. No different than in many other places in the world. If priced properly, they'll sell.

I don't see price appreciation at all. But with 2.2 million Russians visiting a year, and growing, the demand is there.

A bubble? Perhaps. Price stagnation? For sure.

This guy must write those postive outlook articles in the Pattaya real estate magazines

Just reporting my personal observations. It's not all doom and gloom out there. The better units and properties are doing OK. Especially lower priced. Higher priced units are just not moving. Unless you head into the 40MM++ Baht territory. If you've got that kind of money to spend, you just do it because you can and you want to. I wish I was in that category!!

[BlackPuddingBertha]

You only get a price bubble when there is more demand than supply, but with the huge number of unsold units around here this clearly isn't the case. The bubble in Pattaya isn't one of price; it is one of supply.

Too many people contracting to buy new build units that they dont have the slightest intention of owning beyond completion date, and too many people buying tiny units that they intend to rent out even though there arent enough tenants around to fill the units that are already on the market. When these "flippers" find that there are no takers for their resales, or no tenants to be had for their hotel room, they may have to sell cheap to cut their losses.That's the bubble and when it pops I expect all condo prices will drop simply due to colossal oversupply.

[thenervoussurgeon]

Soon the Bankokians who wants to buy here are saturated..

Then we see a lot of discounts coming up for these thousands of 30 sq meter condos..

Because I think few expats wants to live in these chicken-boxes permanently...

Oh please. I've got 74 sq. meters. Imagine what that would cost in Manhattan or Tokyo and how many people would want to live in such a "chicken box" in those places. This is a city. It is urbanized. People live in small spaces in cities.

Yes but thats only 50% bigger than our bedroom in my house, and its Pattaya not Manhattan or belgravia in London