By Shabnam Muzammil:
The Bank of Thailand (BOT) does not need to introduce new measures to rein in the property market as there are currently no signs of a property bubble, according to Jones Lang LaSalle (JLL).
Suphin Mechuchep, Managing Director at JLL, said, “A real-estate bubble can occur when there is excess demand from speculative buyers and abundant liquidity through borrowing, which drive property prices to levels well above their fundamental economic value.”
“Bubble conditions can also be caused by developers undertaking projects without proper market studies and planning, leading to overbuilding. However, our close monitoring of Bangkok’s core and central condominium market shows that those conditions do not currently exist.”
This is despite fears by some economists in the public and private sectors over a potential bubble, due to a thriving stock market and growing currency rates. These factors likely fuel the belief that those who made profits from the stock market would put in money in the housing or condominium market.
Amid growing supply, condo prices in completed buildings and off-plan projects at prime locations in Bangkok are gradually rising.
Suphin added, “While the central bank’s request to commercial banks to become more cautious about mortgage lending is a sound initiative, we don’t think any cooling measures to curb property transactions are necessary at this stage as there remains no clear sign of a real-estate bubble.”
“Any measures to curb property transactions could simply undermine real-estate demand, as the intervention could eventually result in added costs to buyers, for whom affordability is ultimately the key issue.”
Shabnam Muzammil, Senior Journalist at PropertyGuru, wrote this story. To contact her about this or other stories email shabnam@allproperty.com.sg
Recent stories you may have missed
London buyers focus on Thailand
Capital G offers 10-year investment guarantee
Arab tycoon invests in Thailand’s tallest tower
Get daily property news in Thai and English straight to your Inbox from Thailand’s number one property website. Subscribe today for free.