2002 Summary of Housing
Market Situation in Bangkok
the beginning of 2002, the market seems
attractive resulting from various government
promotions on home buying. However, this
will not last long due to the fact that
the overall economic growth will be slow
down (2% GDP growth in 2001 and 2002 compared
with 4% in 2000). There appears some delusive
phenomena. For example, the good sale rate
of newly launched housing projects to date
does not imply the recovery of the market.
Exception cannot be made norm. They are
mainly detached houses and some well studied
townhouses of small size and of market
niche. Still many developers also need
to cut cost to stay competitive with existing
supplies. As observed, of all the new projects
in 2000 - 2001, none was developed by new
investors but rather by those who need
to restructure their debts or those listed
ones who always need some activities to
The government should provide confidence to home buyers
which will encourage them to buy to boost the market. As observed, it was already
4 years but the standard / fair contract (to protect the buyers) and the escrow
account have not yet been implemented. That the government tries to promote home
buying (without proper discounts) may worsen the situation. It may general fake
demand and mal-uses in reserves.
Considering investment, if a property can be sold at
a forced sale price of 70% of the open market value, it would be attractive to
invest. Proper market comparison needs to be exercised by home buyers. Good sources
of cheap homes can be at asset management units of financial institutions and
at fair public auction houses.
The market is expected to be recovered in 2003 - 2004.
At that time costs of construction will be some 60% above the 1996 costs and
the supplies will be largely absorbed. Then people will realize that buiding
a new house is a lot more expensive than buying an existing one. In long run,
housing industries will be of shrinkage in size due to the resale market. New
developers must be more professional and reliable.
What is needed to be careful, is the releases of information
from beneficiaries involved via various media. Many may be some propaganda instead
of fact. Home buyers and investors must be more knowledgeable in the future.