Some people are buying land and are thinking its only a matter of time before they make a vast profit from their investment. But is the bubble about to burst?
Reasons why house prices could fall:
1. The property 'boom' in Europe is over. Prices are levelling out. The market could fall as predicted by many leading advisors. If so expect a ripple effect over here in Thailand.
2. House prices rose dramatically while the baht was weak. When I bought my house the rate was 75 baht to the pound. Now its about 66 baht to the pound. So an investor from abroad has to pay about 15% more than he would have a few months ago - all because of the exchange rate!
3. The Thai political scene is unstable. Corruption is rife. What if all the 'psuedo companys' set up to buy house's and land are investigated. Could the land be confiscated and the 'guilty' Ferang sent out the country?
4. Too many house projects could lead to supply outstripping demand. I already see many developments which look almost abandoned (or is that normal)
5. Some projects admittedly sell fast, but re-sales can take years. What happens when re-sales are cheaper than the houses being built on the same projects?
Reasons why house prices could rise:
1. Prices have been rising since 1998 and there is no indication of this stopping.
2. Thailand, and particularly Hua Hin is becoming more popular with tourists.
3. People are living longer and the cost of living in Europe is still astronomical compared with Thailand.
4. People tend to believe what they want to believe, hence the complete denial that putting your land and house in a company that does not trade, with 6 Thai shareholders you may never have even met, is a big risk.
5. Two 'world class' golf courses being built in Hua Hin is creating a frenzy of 'get-rich-quick' land speculators.
In my humble opinion, I think house prices will go up in desirable areas, such as Kho Takiab and other areas near the beach - not sparce land which happens to be near a new golf course. Well located projects will sell but out-of-the-way cheap houses could become future scheme 'ghettos' and may struggle, certainly in the re-sale market.
One last observation. There seems to be 2 classes of price. Some people put their house on the market at prices way beyond their worth, speculating that some poor fool may pay over the odds. It does not cost them anything to advertise their house with the many estate agents in Hua Hin, so they can not lose to chance their luck, hence there are houses which have been on the market for a very long time. Then there are houses which are put on the market at realistic prices, because the owner genuinely wants to sell. It is difficult to guage what prices houses are actually sold for, because the land office is frequently told the land was sold cheaper then what it was actually bought for (to save the seller / buyer paying high taxes on the sale).
