Despite some experts saying otherwise, local media reports there are no concerns about bubbles when it comes to Thailand’s property market. Despite condo prices quickly increasing the past few years, they are still affordable to buyers, which means there are no bubble worries.
Surachet Kongcheep, Associate Director of the Research Department at Colliers International Thailand, tells the Bangkok Post that the price of residential units in Bangkok are still within the homebuyers’ ability to pay. He also says there is plenty of affordable available supply on the market which goes against conditions found when a bubble forms.
“An average increase in condo prices in Greater Bangkok over the past few years was driven by the greater number of newly launched units in the high-end segment during that period, as they exceeded those in the lower-end segment,” says Surachet.
The increase in newly launched units in the high-end segment occurred after the rejection rate in mortgage loan approvals in the middle-to lower-end segment rose dramatically. This forced many developers to shift to the high-end market where home loan rejections were less likely.
The increase in condo prices can also be attributed to rising land costs, which have jumped 5-6 per cent annually during the past few years. Land prices in the central business district recorded a much higher average increase over this time.
Siam Commercial Bank’s Economic Intelligence Center (EIC) is also of the opinion that despite an increase in housing prices in Greater Bangkok, there is no reason to be concerned about a possible property bubble in Thailand at the moment. The EIC added that there was not speculation in Thailand on the level of the Singaporean and Chinese housing markets that caused bubbles there.
Prasert Taedullayasatit, president of the Thai Condominium Association, says that there is one area of concern right now. That is the possible hike of the Bank of Thailand’s policy rate. He notes that this might have an impact on housing demand in Thailand should it occur.
