Thailand Safe From Property Bubble, Says Banker

[webfact]

Thailand safe from property bubble, says banker
By English News



BANGKOK, May 8 – Thailand’s property market remains secure without any sign of a bubble or oversupply, according to the executive vice president of Kasikorn Bank.

Chatchai Payuhanaveechai said 102,000 new housing units were built last year, a 19 per cent increase year-on-year, while 107,000 units were sold in the same period, representing a 30 per cent increase.

A total of 129,000 units were unsold last year, lower by 4 per cent from 2011. From 2009 to 2011, 130,000 units were unsold each year.

He said the higher housing prices were due to surging costs at 12 per cent since the second quarter of last year with prices of single houses increasing by 3 per cent, townhouses by 2 per cent and condominiums by 6 per cent.

Higher labour costs and land prices in Bangkok and the outskirts, particularly land near the Skytrain, have resulted in escalating housing prices, he said.

Non-performing loans for houses below Bt5 million have decreased from 2.4 per cent in 2011 to 2.3 per cent last year.

The purchase ratio of houses below Bt5 million is 30 per cent with cash and 70 per cent with loans while acquisitions of houses above Bt5 million by cash and loans are equal.

He said the country’s property market will grow this year with overall housing loans at Bt2.45 trillion, a 8.5 per cent increase from last year.

Personal non-performing loans are predicted to amount to Bt280 billion this year, 11 per cent higher than last year, he said. (MCOT online news)


-- TNA 2013-05-08

[Chao Lao Beach]

I think it is time to close that Kasikorn account if this nob is managing it.

If and prices doubling yearly is not a bubble building up to burst, well <deleted> is?

Edited May 8, 2013 by Chao Lao Beach

[Payboy]

Personal non-performing loans are predicted to amount to Bt280 billion this year, 11 per cent higher than last year, he said.

A 10% rise in individual NPL, time to cancel those weekday tee-offs, old boy.

[Neilly]

[commande]

Personal non-performing loans are predicted to amount to Bt280 billion this year, 11 per cent higher than last year, he said.

A 10% rise in individual NPL, time to cancel those weekday tee-offs, old boy.

That is a really bad indicator - 11% higher than last year, so what was last year 10%??? They are making bad loans on overpriced property people can't afford.... Ummm that is the beginning of a bubble...

[chainarong]

Not surprising, with over three Quarters of the population in the poor house, there is only basically one section of the population able to buy, I have plenty of units ,houses in the estate around me, most are vacant, since being built seven years ago, some are now getting that Adams family haunted look about them.

[Thai at Heart]

Personal non-performing loans are predicted to amount to Bt280 billion this year, 11 per cent higher than last year, he said.

A 10% rise in individual NPL, time to cancel those weekday tee-offs, old boy.

That is a really bad indicator - 11% higher than last year, so what was last year 10%??? They are making bad loans on overpriced property people can't afford.... Ummm that is the beginning of a bubble...

These are personal loans. Although what they are secured on, who knows, cars, chanotes????

[Brasilouro]

Well if a BANKER has told us it must be right !!! Hahaha

[givenall]

These are same bankers who caused the West financial disasters

sent from-would like to know

[clockman]

Trust me iam a banker !!!!!!!

[IMA_FARANG]

My (irrelevant?) question is this:

Of those newly built units that are being sold what percentage is being bought by the buyers as a residence and what percentage of those newly built sales are in fact being bought NOT as a residence but as an "investment" or as rentals (renting to others for income).

As someone else mentioned in his post on this topic quite a few of the units in his area were apparently not occupied by the buyers, but were being held as "investments" for the future,

The buyers seem to be betting their money on a continuing rise in prices.

But are any units actually selling (i.e. re-sales), and what percentage of those investment units is actually re-selling?

The answer to that question is the answer whether the growth in a healthy upsurge in the Thai real estate market, and a speculative bubble in the same market.

[HarryMilton]

We should all be thankful that there are so many real bankers and economists on this forum ready to ridicule the opinion of others probably in a better position to give an opinion.

[chiang mai]

Any moment now there's another banker who's going to wade in with his version of reality.

[jbrain]

We should all be thankful that there are so many real bankers and economists on this forum ready to ridicule the opinion of others probably in a better position to give an opinion.

Don't believe that there are any real bankers on this forum, thank god for that.

The real bankers are the ones that caused the crisis that is going on in the world these days, and write for the very same reason articles like the OP.

[Thai at Heart]

My (irrelevant?) question is this:

Of those newly built units that are being sold what percentage is being bought by the buyers as a residence and what percentage of those newly built sales are in fact being bought NOT as a residence but as an "investment" or as rentals (renting to others for income).

As someone else mentioned in his post on this topic quite a few of the units in his area were apparently not occupied by the buyers, but were being held as "investments" for the future,

The buyers seem to be betting their money on a continuing rise in prices.

But are any units actually selling (i.e. re-sales), and what percentage of those investment units is actually re-selling?

The answer to that question is the answer whether the growth in a healthy upsurge in the Thai real estate market, and a speculative bubble in the same market.

Well precisely. Of course, in the rest of the world they get around this by having people declare a main residence, and others differently, but it is extremely convenient, if you happen to have a large wedge of dirty money sitting around, to plop it into bricks and mortar.

Not to say, that literally hundreds of thousands of people exist in a cash only existence, where taxes and the such aren't ever part of the equation. Why on earth they would grant loans to people wanting to buy houses as investments as opposed to those buying houses to live in on the same terms, is a question that he as a banker should be able to answer.......

[BookMan]

We should all be thankful that there are so many real bankers and economists on this forum ready to ridicule the opinion of others probably in a better position to give an opinion.

Don't believe that there are any real bankers on this forum, thank god for that.

The real bankers are the ones that caused the crisis that is going on in the world these days, and write for the very same reason articles like the OP.

Of course.

The bloke from Kasikorn bank has a vested interest in saying that there is no property bubble. Whether there is one or not I don't know, but I would not listen to the musings of bank leaders or a Real estate spruiker on the subject.

[Thai at Heart]

We should all be thankful that there are so many real bankers and economists on this forum ready to ridicule the opinion of others probably in a better position to give an opinion.

Don't believe that there are any real bankers on this forum, thank god for that.

The real bankers are the ones that caused the crisis that is going on in the world these days, and write for the very same reason articles like the OP.

Of course.

The bloke from Kasikorn bank has a vested interest in saying that there is no property bubble. Whether there is one or not I don't know, but I would not listen to the musings of bank leaders or a Real estate spruiker on the subject.

Indeed a truly objective view would be worth just a tad more. How many corporate loans does he have out to developers I wonder?

[falang07]

If bankers do their best to convince the population that there is no bubble, I am sure as hell that there is a giant one building up already.

[rubl]

Trust me iam a banker !!!!!!!

... and the cheque is in the mail, I guess

[Naam]

I think it is time to close that Kasikorn account if this nob is managing it.

If and prices doubling yearly is not a bubble building up to burst, well <deleted> is?

prices haven't even doubled the last 10 years.

[Naam]

12 Thai bashing, respectively irrelevant and/or ridiculous layman's postings. more please

[bigbamboo]

12 Thai bashing, respectively irrelevant and/or ridiculous layman's postings. more please

This isn't Thai bashing but banker bashing, which given their piss poor record and the damage they've caused most of us over the past few years is perfectly justified.

[AnotherOneAmerican]

I think it is time to close that Kasikorn account if this nob is managing it.

If and prices doubling yearly is not a bubble building up to burst, well <deleted> is?

prices haven't even doubled the last 10 years.

House build prices haven't doubled in the last 10 years.

Land prices in and around CM have increased x10 in the past 10 years.

[allan michaud]

Wow, so many obvious mathematical errors I don't know where to start. 129,000 is apparently a 4% drop from 130,000???

I certainly wouldn't want this person in charge of my money.

[Thai at Heart]

A total of 129,000 units were unsold last year, lower by 4 per cent from 2011. From 2009 to 2011, 130,000 units were unsold each year.

Now this statement is open to two interpretations. Does that there mean there is a stock of 390,000 unsold houses sitting in the pipeline from 2009 onward? Or that the total of unsold stock at the end of each year was 130,000?

[chiang mai]

"Personal non-performing loans are predicted to amount to Bt280 billion this year, 11 per cent higher than last year, he said. (MCOT online
news)"

Just to head this one off at the pass: NPL's increase in accordance with the growth in lending and since personal loans grew year on year, the forecast NPL figure is trending downwards, as is the reported property NPL figure.

[KhunHehe]

Bankers are arrogant know-nothings or liars as my father used to say.

[NeverSure]

12 Thai bashing, respectively irrelevant and/or ridiculous layman's postings. more please

Naam you are as blind as a bat while pompously leading people astray. Who appointed you the guru of finances for the financial forums, when you know nothing of macroeconomics?

Just LOOK at your posts. They are smart ass remarks, not real information backed by facts. You think you are the master of the one-liner, but you actually say nothing beyond attempting to make yourself sound important.

You are also dead wrong. You should go hide somewhere before you cost some poor blokes their life savings.

How about some facts instead of pompous one-liners?

Link March 9, 2013 Emphasis mine.

"...Thai state controlled banks are in trouble. The SME Bank and IslamBank have combined bad debt of nearly Bt80 billion. If privately owned they would already be bust! Krung Thai Bank’s lending portfolio has high exposure to government-related projects, The government Housing Bank is lending to subprime homeowners, similar to the US subprime home market.

But the real story is the Bank for Agriculture and Agricultural Cooperatives (BAAC). The debt incurred by the rice and other crop intervention schemes now stands at a whopping Bt601,072 billion – and that’s not a typing error. Equal to 0.5% of Thailand’s GDP!

In the end the government will have to fiscalise the debt of the state-owned banks. Fresh figures indicate Bt700 billion already.

Unfortunately the monetary policy is focusing on boosting growth rather than safeguarding price stability. Incredibly, the government sees little risk in asset price bubbles?

In the “Keeping an eye on Excesses” report (27.02.12) asset prices in Thailand are growing to create financial imbalances. The BOT still keeps the interst rate below inflation, yielding a negative rate of 0.85%. Between 2005 and present the BOT has maintained, on average, a negative interest rate of 0.35%. This reflects the governments pro-growth policy and has forced money into speculative investments.The Thai rate is already one of the lowest in the region and asset price bubbles are forming, yet FInance Minister Kittiratt Na Ranong still favours further rate cuts.

The Stock Exchange of Thailand (SET) has twice doubled since 2009, rising from 400 in 2009 at the height of the US financial crisis, to 800 in mid-2011. Now it has almost doubled itself again by passing the 1,500 mark. Jarumporn Chotkiasathira has come out to warn of at least 120 stocks whose prices and valuations indicate a ‘bubble’.

Banking authorities are ignoring this and doing nothing to stem inflows into the market.

Important to note for foreign investors is that the Real Estate market is showing signs of price bubbles. Since 2009 real estate prices have surged 36% – ahead of a cumulative inflation rate of 15% over the same period. The middle classes and low income families will have a more difficult time owning homes if land and real estate prices continue this trend.

Bank loans to individuals have been jumping sharply from 15% in 2005 to almost 25% presently. As a result, Thai household debt is rising at an alarming rate. The National Economic and Social Development Board has come up with an outstanding household debt figure of Bt2.9 trillion:

21% Car loans

33% Motorcycle loans

29% Personal loans

The asset price bubbles and financial imbalances in the private and public sectors are worrying signs that should be dealt with early. Global economic recovery is slim, as evidenced by negative growth rates in the US, EU and Japan int he last quarter of 2012.

The Thai government should cut its populist and mega-project spending. The BOT must take the punch bowl away instead of waiting for the party to be over.

These inflated prices cannot be maintained. Better investment value can be found easily in other parts of Asia."

Edited May 8, 2013 by NeverSure

[Thai at Heart]

"Personal non-performing loans are predicted to amount to Bt280 billion this year, 11 per cent higher than last year, he said. (MCOT online

news)"

Just to head this one off at the pass: NPL's increase in accordance with the growth in lending and since personal loans grew year on year, the forecast NPL figure is trending downwards, as is the reported property NPL figure.

Well, yes, but this is a little like the difference between the income statement and the balance statement of a company. Forecasting NPL, one would imagine to be extremely difficult. Previous performance is no gurantee of future returns.

[Bel Mondo]

Heard the same sentiments just before the 1997 Asian financial meltdown. The USD went from 25/1TB to over 50.

Thai property owners couldn't off-load their property quick enough. And property was a bargain - Half Price!

It's like a Ponzi Scheme - don't be the last one to try to sell your inflated priced property. You'll be the looser, and the Condo/Estate developer who sold it to you will be the winner.

In Pattaya, some Residential property has been on the market for years and can't be sold. When the house or condo is finally sold, it is at a loss of 20-40 percent. Sure the Low-end, under 1M condos are being flogged by the developers to the Russians. But Russians are used to living in 30 square meter closets in the "Mother-land". Let "Igor" and "Natashka" try to sell their closet after a few years.No way except to another Igor and Natashka.

The condo/estate developers from the Middle East and India will rake it in as usual, The buyers will be gutted like the fish they are.