I think Bangkok condo market is crashing

[theguyfromanotherforum]

For the first time on prakard I am seeing units being sold below market value. Most units are cheaper than a year ago. True, I am only looking at the units close to BTS outside the city Centre, but still....

[KittenKong]

Dont you mean "being advertised" rather than "being sold"?

Any who is to say what the "market value" is? As far as I'm concerned that is the average price that a particular type of unit actually sells for and, as far as I can see, that has never been very close to the advertised prices. Not in Pattaya anyway. Maybe Bangkok is wondrously different (but I doubt it).

[theguyfromanotherforum]

Yes being advertised. Considering most Thais like to sell their condos at ridiculous prices and don't mind waiting even 20 years to sell it (as with some units I visited ) I must say that this is a strange development.

[wordchild]

well i wouldnt be surprised if it had a fair old wobble, in particuar for new builds, land owners and developers have hiked up prices considerably in recent years.Also the Thai economy is pretty dreadfull right now (as i can see in the daily numbers for the business i work for). But for a real , full on, property crash (where the whole lot goes down) i think you would need more property related leverage, in the whole system, than there is right now; other than the speculators buying off plan, property ownership in Thailand is still generally conservatively financed, certainly when compared to places like the UK. On a case by case basis though there probably will be a few bargains around over the next year or so ,for those who have the cash.

Edited September 18, 2015 by wordchild

[NeverSure]

I have thought a "crash" was coming for some time but it will take time to see what a crash looks like. As Worldchild said there isn't the leverage that there is in the West.

Thais do tend to sit on things when they don't sell, but then what does a farang do with his condo if he needs to sell and return to his home country and needs the money? I'd think he'd have to sell at market. That's where I think it would show in values. I don't think the values are there compared to asking prices.

Instead of calling it a crash I'll just say that I don't think people can sell at asking prices of even two or three years ago. For some time I've seen the same environment that I saw in the US before the crash of 2008. Prices had been rocketing up without justification for several years. All of a sudden the market realized that the emperor had no clothes. Prices for middle class housing outstripped what the middle class could pay and the only buyers were well healed investors. Time will tell but that's what I see in the Thai market.

Cheers.

[coulson]

Some older/ tucked away units are gaining market value, maybe because they weren't ridiculously priced in the first place. The developments are at risk.....which doesn't mean the property market in it's entirety.

[jalansanitwong]

All i know after lliving here for years is that you NEVER buy or rent property advertised in the Bangkok Post. Rents up to 120,000 month , condos offered at (bargain ) prices for 15 million baht !!

Thais dont pay these prices. If i ever by property here (unlikely) i would insist on paying Thai price. Thai price is a fraction of what farangs pay. LOL

I rent a 4 storey building with a/c and two western bathrooms for 7,500 baht/m near the river in central BKK. Always rent dont buy in LOS.

If you've lived here several years and you have some good Thai friends they will show you how to buy smart here. Up to you.

Remember that thousands of nor sor 3 and 4 title deeds have been issued under the table by corrupt lands officials.

Who knows what will happen here over the next few years when CP takes over the reigns.

Edited September 19, 2015 by jalansanitwong

[theguyfromanotherforum]

You don't even need a Thai friend. If you go to some websites you will notice 15 listings for the same condo at inflated price while there will be 2 at more normal price. Mind you I do look at nicer condos and new buildings will always attract some premium.

I really laugh when some old geezer (I'm getting old, so not laughing at ageism just stupidity ) starts lecturing here on Thai Visa how life in Thailand isn't cheap and young people shouldn't be here. Yes, it's not cheap when your wife and family are ripping you off.

[blackcab]

+1 about the multiple listings. I've also seen it with very cheap property and at the other end commercial property over 50 million.

Why is it that the vast majority of land in one area is a similar price per square wah? Because the agents list it that way, regardless of the vendor's original price.

[shirtless]

If you enjoy losing money invest in Thailand property, at Falang price

[jalansanitwong]

You don't even need a Thai friend. If you go to some websites you will notice 15 listings for the same condo at inflated price while there will be 2 at more normal price. Mind you I do look at nicer condos and new buildings will always attract some premium.

I really laugh when some old geezer (I'm getting old, so not laughing at ageism just stupidity ) starts lecturing here on Thai Visa how life in Thailand isn't cheap and young people shouldn't be here. Yes, it's not cheap when your wife and family are ripping you off.

Ive never thought about doing what you suggest with multiple sites. I dont doubt what you say is true either.

I still believe that your best bet is to have a good Thai friend (60y/old +) who knows how the system works.Farang expats who spend all night on Pattaya bar stools know FA.

Many Thais have gambling debts and hence there are many distress sales in Thailand. They have to offload assets to pay their debts.

If i ever drive here i will get a Thai friend to ask around the traps anyone who has a late model car they want to be rid of. Some Thais have 3 pick up trucks lying around the place. 300K would probably land a late modelHilux diesel.

Where do farangs buy cars? ......car yards? Farangs dont know because they dont have any knowledgeable Thai friends. Just a Thai wife.

[KittenKong]

Where do farangs buy cars? ......car yards? Farangs dont know because they dont have any knowledgeable Thai friends. Just a Thai wife.

I bought my car new from a dealer. I will probably keep it for a very long time as it gets very little wear (I have no extended Thai family eating and sleeping on the back seats, in fact only the driver's seat has had any use in the three years I have owned the vehicle, and I dont drive off-road).

Why dont I buy used cars here? Because I dont really trust anyone here to maintain their car properly, or to drive it properly for that matter.

[MichaelJohn]

The Thai condo market won't crash as most condos are not bought with borrowed money.

In the west, where we have crashes, they happen because people HAVE to sell to repay debt. In Thailand most condos/property is bought without loans so there's little urgency to sell. If the market falls then people sit it out till things recover.

Sure, there's ups and downs but I doubt you'll see the crash you're expecting.

[mcfish]

Yeah yeah the bubble will burst and the baht will collapse. I wish I had a dollar for each of these silly threads that have been thrown up over the last 15 years with zero meaningful research. Pretty soon the "condos in my soi have no lights" punters will catch a wiff of this thread ..

Honestly OP dont be so lazy and at least google until you find meaningful data , its the least you could do. And it seems most punters in Bangkok are living in castles for a few thousand baht whilst their millions are multiplying yearly in stocks that never fail....its all a huge yawn really

[losworld]

The market will fall quickly soon enough only partially offset by the falling baht. Anyone who thinks there is not bad lending going on in Thailand is delusional or ill informed. Watch and learn.

[WorkingTourist]

The Thai condo market won't crash as most condos are not bought with borrowed money.

In the west, where we have crashes, they happen because people HAVE to sell to repay debt. In Thailand most condos/property is bought without loans so there's little urgency to sell. If the market falls then people sit it out till things recover.

Sure, there's ups and downs but I doubt you'll see the crash you're expecting.

Furthermore, in the West we generally have property taxes, which means that it can be expensive to just let condos go unused.

Ive looked at unused condos in Thailand, and it was very clear that the owner was in no hurry to sell, in fact, some werent even sure they wanted to sell, because maybe some future family member wanted to use it

[theguyfromanotherforum]

The Thai condo market won't crash as most condos are not bought with borrowed money.

In the west, where we have crashes, they happen because people HAVE to sell to repay debt. In Thailand most condos/property is bought without loans so there's little urgency to sell. If the market falls then people sit it out till things recover.

Sure, there's ups and downs but I doubt you'll see the crash you're expecting.

Furthermore, in the West we generally have property taxes, which means that it can be expensive to just let condos go unused.

Ive looked at unused condos in Thailand, and it was very clear that the owner was in no hurry to sell, in fact, some werent even sure they wanted to sell, because maybe some future family member wanted to use it

I think this is wrong. This is exactly why condo market will crash in my opinion. The lack of taxes and maintenance make even the premium condos look like a dump in 10 years. I am staying at Chatrium. The place was built in 2007. Although it looks very nice on surface and was built by same people who built Emporium, there are numerous water leakages and moulds. Not to mention paint peeling off and a total disregard for any serious maintenance whatsoever. In contrast my Canadian condo building that was built in 2000 still looks like new despite harsh winters.

I believe this is the reason Thai people only like to buy new.

[jalansanitwong]

I was talking about buying late model cars ,not new ones.

Where do farangs buy cars? ......car yards? Farangs dont know because they dont have any knowledgeable Thai friends. Just a Thai wife.

I bought my car new from a dealer. I will probably keep it for a very long time as it gets very little wear (I have no extended Thai family eating and sleeping on the back seats, in fact only the driver's seat has had any use in the three years I have owned the vehicle, and I dont drive off-road).

Why dont I buy used cars here? Because I dont really trust anyone here to maintain their car properly, or to drive it properly for that matter.

I was referring to late model cars not new ones. Obvioulsy you have to go to a dealers yard to buy a new model. Not all Thais treat their cars badly . Thais in my soi are constantly shampooing the duco and checking fluid levels.

If you have experience with cars and know how to look for accident repair work then you should be OK here. Ive never driven because there's nowhere to park in Bangkok unless you dont mind getting side swiped. Thais wont stop and leave their personnal details,they'll just zoom off.

Many new condos or apartments in the suburbs of Bangkok sell for 999,000-1.6 milion baht to Thais. Its only when you start talking about farangs in Phuket,Pattaya and Sukhumvit that condo prices skyrocket.

Its unlikely the market will collapse,it will flatten out for the long term.You dont buy here if you want capital gain. Go to Australia for that action.

People buy condos for millions of Baht in Pattaya for the sea view.????? Last time i went there the water was three shades of dark brown and oil slicks from boats.. Raw sewerage has been pumped into the sea for decades.

[theguyfromanotherforum]

Yes they treat their cars better than a house because the car is parked in front and has to look hiso. In contrast no one from the outside can really see the house all they can see is a car.

[soomak]

The Thai condo market won't crash as most condos are not bought with borrowed money.

In the west, where we have crashes, they happen because people HAVE to sell to repay debt. In Thailand most condos/property is bought without loans so there's little urgency to sell. If the market falls then people sit it out till things recover.

Sure, there's ups and downs but I doubt you'll see the crash you're expecting.

Not sure where you got your data (please share).

My ex-gf bought two properties, one small condo as investment and one small townhouse for living in. Both where bought with nearly zero down-payment, meaning its all debt.

She will keep paying for them for the next 25-30 years, unless of course she will sell the condo when she realizes she can't keep paying the banks half her salary every month.

It's true that Thais prefer to keep their property empty for 20 years, rather than selling at a loss (which eqautes to loss of face). But many have bought using bank loans and would sell if can't pay the monthly installment.

[theguyfromanotherforum]

He is probably referring to Thai elite who need to park the money long term and buy 10 units all cash in every new development. Normal Thai people are indeed in a lot of debt.

[WorkingTourist]

Furthermore, in the West we generally have property taxes, which means that it can be expensive to just let condos go unused.

I think this is wrong. This is exactly why condo market will crash in my opinion. The lack of taxes and maintenance make even the premium condos look like a dump in 10 years. I am staying at Chatrium. The place was built in 2007. Although it looks very nice on surface and was built by same people who built Emporium, there are numerous water leakages and moulds. Not to mention paint peeling off and a total disregard for any serious maintenance whatsoever. In contrast my Canadian condo building that was built in 2000 still looks like new despite harsh winters.

I believe this is the reason Thai people only like to buy new.

I dont get your reasoning at all.

How does lack of property taxes cause occupied buildings to be mismanaged?

And how does lack of maintenance of occupied buildings lead to a market crash?

[KittenKong]

He is probably referring to Thai elite who need to park the money long term and buy 10 units all cash in every new development. Normal Thai people are indeed in a lot of debt.

Indeed.

Thai household debt/GDP ratio at the end of 2014 was 86% and has probably only gone up since then. I think that this is insanity in any language, and only marginally less stupid than the Chinese who borrowed heavily to "invest" in their stock market. I suppose we should just be thankful that they dont all borrow to gamble in Cambodian casinos.

http://www.reuters.com/article/2015/06/17/idUSFit92561220150617

[KittenKong]

How does lack of property taxes cause occupied buildings to be mismanaged?

Property taxes encourage people to sell property that they dont want or use. These are (presumably) only bought by people who do actually want to use them and so will spend money to keep them in reasonable order.

In my building there are several units that have not been inhabited for several years. God alone knows what they look like on the inside. The common fee debts keep mounting up but they are very small compared to what a council tax or ownership tax might be. Plus the tax authorities would probably be more inclined to follow up the debt than my building management is (they are bone idle and will avoid doing anything at all, if possible). Luckily our building is large and well-occupied and can afford to carry a small percentage of people who dont pay their common fees, but I have seen other buildings with many absentee owners of unused units where the accounts have gone completely to pot and millions have been syphoned off by crooked management.

[WorkingTourist]

How does lack of property taxes cause occupied buildings to be mismanaged?

Property taxes encourage people to sell property that they dont want or use. These are (presumably) only bought by people who do actually want to use them and so will spend money to keep them in reasonable order.

In my building there are several units that have not been inhabited for several years. God alone knows what they look like on the inside. The common fee debts keep mounting up but they are very small compared to what a council tax or ownership tax might be. Plus the tax authorities would probably be more inclined to follow up the debt than my building management is (they are bone idle and will avoid doing anything at all, if possible). Luckily our building is large and well-occupied and can afford to carry a small percentage of people who dont pay their common fees, but I have seen other buildings with many absentee owners of unused units where the accounts have gone completely to pot and millions have been syphoned off by crooked management.

Yes, lack of property tax means people can just leave units sitting without any real cost, that is what I already wrote, and to which I was told “this is exactly why condo market will crash”. Hence I am asking, how do we go from the described situation to a market crash?

You only quoted part of my post, and that part was sort of rhetorical, because property tax has nothing to do with management’s inability to collect maintenance fees, and not a catalyst for a market crash either.

[trogers]

What is the meaning of 'Crashing'?

The only time the Thai property market did crashed was during the Tom Yum Kung crisis.

There was a small dip and a couple of years of price stagnation in 2007-8 due to the Sub-prime crisis.

I would expect something similar this year and next, as the world faces the deflation spillover from China.

[realenglish1]

Just sit back and wait Its supply in demand If you buy a condo and try and rent it out like a 34 Square meter apartment for 23.000 baht you will not get anyone to rent.

But if you ask 11,000 or 12,000 you will get takers

Prices are over inflated by builders and it is only time before we see a crash

Pure economics that s it

[asdecas]

I agree, this kind of lazy post is akin to tabloid journalism, with anecdotal comments from punters offering their novice advice to match.

The only meaningful statistics come from (usually Western or Western-trained) specialists who deal with the property market or analyse it for the stock exchange. They will tell you that there is currently somewhat of a cyclical downturn, likely to continue for some time, depending on both domestic and international, micro- and macro-factors.

Anyone who's been around the block a few times has seen far worse, so to call it a 'crash' is absurd.

Talk to the ethnic Indians who own a good proportion of downtown Bangkok land and property. Ask them if they are worried in the long term.

[miamiman]

It's just starting...think "cognitive dissonance" when it comes to buy from a Thai owner. The Thai will not usually negotiate the "price"...they are locked in to what they think the price is regardless of Price Theory economics. I really do not think they have a clue. I bought it for 5 million and now it must be worth 6 million a year later.... Umhh yeah, even in a depressed market.

A Thai guy had a nice old Mitsu classic SUV that he was asking 500000 baht for and I offered him the market price based on nice condition of 350000. He said no ans was offended. That's it here in a nutshell UNTIL it really gets to be tough times. Even in 1990 crash they held on.

[kerrysum]

If you enjoy losing money invest in Thailand property, at Falang price

No truer words could be said!

Guess that is why I have never invested.

#2 Why I decided not to retire there.... I think they are way over-inflated.