Just some observations here. Took a drive down Soi 116 an was amazed that the area has now turned into Milton Keynes, more houses than you can shake a stick at - all that's missing are the roundabouts.
Huge swathes of land being cleared and packs of labourers frantically digging, grinding and banging on hundreds of houses and 'Bali villas' in various stages of completion.
Surely the supply now far out strips the demand? Most of these places (and some of them looked like palaces) were unoccupied yet the prices are still as high as the hopes of selling them in the current economic climate.
It seems that the economic downturn hasn't effected this sector as new places are still being built while old ones remain for sale. Over half of the gates on many developments there had for sale signs on them, maybe bought a couple of years ago by foreigners now seeking a profit or wanting to move on.
Will the supply keep going up and will the prices ever come down?
Will Hua Hin property prices ever drop?
Will Hua Hin property prices ever drop?
Who is the happier man, he who has braved the storm of life and lived or he who has stayed securely on shore and merely existed? - Hunter S Thompson
Just about all the large house buiders have stopped building here and laying off thousands of trades men it's really grim, for sale boards everywhere but none with sold on the whole housing market is on it's knees. 
I can't belive that HH is not feeling this yet even cars are getting cheaper all the main dealers are offering 0% because they can't shift them, and the high street is starting to struggle aswell.
I can't belive that HH is not feeling this yet even cars are getting cheaper all the main dealers are offering 0% because they can't shift them, and the high street is starting to struggle aswell.
Will prices ever come down?
In my experience, most people are putting their 2nd hand house's on the market about 10% above what they will eventually hope to get. They already overvalue their house by about 25%. For example, a typical 2nd hand house with a true value of 10 million baht will on average be overvalued by the owner by 25% so they think its worth about 12.5 million. Then they add another 10% so a house worth about 10 million baht goes on the market for about 14 million. They will never sell at this price unless they are exceptionally unique in some way. You also get "chancers" who put their houses on the market at ridiculous prices on a no sale no fee basis on the off chance they find a gullible punter.
The truth is, those that set the sale price at a realistic level which reflects todays market are the only ones that actually manage to sell.
As for new developments, developers are currently considering putting prices UP due to huge increases in construction costs. The excellent top class projects will get away with this, but most developers will have to look forward to smaller profit margins and slower sales.
In my experience, most people are putting their 2nd hand house's on the market about 10% above what they will eventually hope to get. They already overvalue their house by about 25%. For example, a typical 2nd hand house with a true value of 10 million baht will on average be overvalued by the owner by 25% so they think its worth about 12.5 million. Then they add another 10% so a house worth about 10 million baht goes on the market for about 14 million. They will never sell at this price unless they are exceptionally unique in some way. You also get "chancers" who put their houses on the market at ridiculous prices on a no sale no fee basis on the off chance they find a gullible punter.
The truth is, those that set the sale price at a realistic level which reflects todays market are the only ones that actually manage to sell.
As for new developments, developers are currently considering putting prices UP due to huge increases in construction costs. The excellent top class projects will get away with this, but most developers will have to look forward to smaller profit margins and slower sales.
From todays Bangkok Post:
For those who went through the 1997 property and finance meltdown, it may be disturbing to see the past mirror itself in today’s heavyweight residential and resort sectors.
Robert Collins, managing director of the property agency Savills Thailand, said that some aspects of the residential and resort sectors now show similarities to Thailand’s pre-1997 office market. He notes the sheer volume of residential supply, particularly condominiums, not just in Bangkok but in key resorts as well, which is being brought into the market by big, experienced developers plus some newcomers.
‘‘It’s not necessarily a huge bubble growing. We are seeing sort of a mirroring of how the office market pre-1997 was particularly overdeveloped,’’ he says.
He recalls office vacancy rates of 40% a decade ago, but notes also how the market adjusted to reality fairly smoothly. For several years no new supply entered the market and existing supply was absorbed, the result being a relatively stable market today.
‘‘Office rentals today are only really just back to where they were in 1992, and they are very stable, it’s been a long recovery process.’’
Fast-forward to today’s residential and resort markets, and signs that there could potentially be a downturn in certain sectors if the volume of the new supply entering the market continues at the current level.
Mr Collins sees a potential impact on his own industry, given that several brokerages have entered the market, especially in Phuket, Samui, Pattaya and Hua Hin since 2000-01. ‘‘Any protracted slowdown in the marketplace is going to have quite a significant impact on all these new players.’’
He notes that in the years immediately following 1997 the number of property agents in Bangkok contracted sharply, with several major international companies either withdrawing or drastically reducing their services and staff numbers.
The risk that new brokerages now face is greatly magnified by their dependence on foreign buying which, Mr Collins pointed out, is losing steam amid the current global slowdown.
Brokers and others are counting on land values in resort markets, particularly Phuket and Samui, holding firm. However, the reason these values have held up is mainly due to a lot of trading by speculators and agents.
‘‘But those value points really need to be underpinned by highest investment use, from a retail perspective in the resort or pure five-star hotels. On the villa sales trade I think we are likely to see a slowdown, probably not that protracted.
‘‘While buyers in the very high-end villa sector aren’t mortgage-dependent . . . they need to be cash buyers in the first place. We are seeing that the global slowdown has affected the UK and parts of the US to a great extent, that easy availability of cash is not there to the same extent it was before.’’
Another weak point is that the Thai resort market is dependent on regional buyers, particularly out of Hong Kong, and developers in other parts of the world where prices are coming down are now trying to attract the same buyers.
Given current conditions, there is likely to be pressure on high-end property in Thailand in the medium term. ‘‘It’s fair to say, though, that the market domestically still has a few bright spots, particularly well-planned and well-executed developments in good locations conceived by financially strong developers. Those projects that fall into this grouping are still performing very well.’’
Another area that should thrive is property with equally good demand from both domestic and international buyers. ‘‘Condominiums that appeal to Thais and foreigners really outperform the market trend. Where there is equal demand, the projects are very healthy.’’
Where individual owners are concerned, Mr Collins says that those owning a completed unit are unlikely to see prices go down because construction costs have risen considerably.
‘‘I think the pressure is going to be placed on the new supply that is offplan . . . as was the case after 1997, property prices had come down quite sharply yet completed property sold quite well in that immediate period.
‘‘This time going forward, with construction costs up so sharply, we may see that a lot of new supply that is planned in the medium term may in fact be put off for quite some time. We are not predicting that existing supply will lose value. The pressure is going to be in the lofty expectations of some of the new supply that’s due to come online.’’
For those who went through the 1997 property and finance meltdown, it may be disturbing to see the past mirror itself in today’s heavyweight residential and resort sectors.
Robert Collins, managing director of the property agency Savills Thailand, said that some aspects of the residential and resort sectors now show similarities to Thailand’s pre-1997 office market. He notes the sheer volume of residential supply, particularly condominiums, not just in Bangkok but in key resorts as well, which is being brought into the market by big, experienced developers plus some newcomers.
‘‘It’s not necessarily a huge bubble growing. We are seeing sort of a mirroring of how the office market pre-1997 was particularly overdeveloped,’’ he says.
He recalls office vacancy rates of 40% a decade ago, but notes also how the market adjusted to reality fairly smoothly. For several years no new supply entered the market and existing supply was absorbed, the result being a relatively stable market today.
‘‘Office rentals today are only really just back to where they were in 1992, and they are very stable, it’s been a long recovery process.’’
Fast-forward to today’s residential and resort markets, and signs that there could potentially be a downturn in certain sectors if the volume of the new supply entering the market continues at the current level.
Mr Collins sees a potential impact on his own industry, given that several brokerages have entered the market, especially in Phuket, Samui, Pattaya and Hua Hin since 2000-01. ‘‘Any protracted slowdown in the marketplace is going to have quite a significant impact on all these new players.’’
He notes that in the years immediately following 1997 the number of property agents in Bangkok contracted sharply, with several major international companies either withdrawing or drastically reducing their services and staff numbers.
The risk that new brokerages now face is greatly magnified by their dependence on foreign buying which, Mr Collins pointed out, is losing steam amid the current global slowdown.
Brokers and others are counting on land values in resort markets, particularly Phuket and Samui, holding firm. However, the reason these values have held up is mainly due to a lot of trading by speculators and agents.
‘‘But those value points really need to be underpinned by highest investment use, from a retail perspective in the resort or pure five-star hotels. On the villa sales trade I think we are likely to see a slowdown, probably not that protracted.
‘‘While buyers in the very high-end villa sector aren’t mortgage-dependent . . . they need to be cash buyers in the first place. We are seeing that the global slowdown has affected the UK and parts of the US to a great extent, that easy availability of cash is not there to the same extent it was before.’’
Another weak point is that the Thai resort market is dependent on regional buyers, particularly out of Hong Kong, and developers in other parts of the world where prices are coming down are now trying to attract the same buyers.
Given current conditions, there is likely to be pressure on high-end property in Thailand in the medium term. ‘‘It’s fair to say, though, that the market domestically still has a few bright spots, particularly well-planned and well-executed developments in good locations conceived by financially strong developers. Those projects that fall into this grouping are still performing very well.’’
Another area that should thrive is property with equally good demand from both domestic and international buyers. ‘‘Condominiums that appeal to Thais and foreigners really outperform the market trend. Where there is equal demand, the projects are very healthy.’’
Where individual owners are concerned, Mr Collins says that those owning a completed unit are unlikely to see prices go down because construction costs have risen considerably.
‘‘I think the pressure is going to be placed on the new supply that is offplan . . . as was the case after 1997, property prices had come down quite sharply yet completed property sold quite well in that immediate period.
‘‘This time going forward, with construction costs up so sharply, we may see that a lot of new supply that is planned in the medium term may in fact be put off for quite some time. We are not predicting that existing supply will lose value. The pressure is going to be in the lofty expectations of some of the new supply that’s due to come online.’’
Re: the over-pricing of resale houses, when I speak to people it has a lot to do with them not being concerned if they sell right away, some aren't even that fussed about moving at all and are just trying for a high price.
Looking at the wider picture, if/when it really impacts here the resales people who absolutely have to sell, will have to drop the price. If they don't have to sell will they just sit it out, its different here to back home as most foreigners living here do not have mortgages and the rising interest payments. I don't know how many re-mortgage back home to buy here.
The fear is new housing developments not getting finished, developers may have to sit it out, they only have scope for reductions from their margin as building materials/labour is fixed, land prices are fixed as Thais will hold out for 'their' price.
Mostly the developers build to order, they don't have loads of finished un-sold houses to reduce. The houses you see being built or sitting empty are generally sold. I have customers completing then leaving it empty for a year or so, they are buying for the future at today's prices. Obviously some are built without customers so they could become bargains.
Just my take on it.
SJ
Looking at the wider picture, if/when it really impacts here the resales people who absolutely have to sell, will have to drop the price. If they don't have to sell will they just sit it out, its different here to back home as most foreigners living here do not have mortgages and the rising interest payments. I don't know how many re-mortgage back home to buy here.
The fear is new housing developments not getting finished, developers may have to sit it out, they only have scope for reductions from their margin as building materials/labour is fixed, land prices are fixed as Thais will hold out for 'their' price.
Mostly the developers build to order, they don't have loads of finished un-sold houses to reduce. The houses you see being built or sitting empty are generally sold. I have customers completing then leaving it empty for a year or so, they are buying for the future at today's prices. Obviously some are built without customers so they could become bargains.
Just my take on it.
SJ
There is an element of speculation, and speculation leads to bubbles and bubbles inevitably lead to a burst. This is particularly so now that be have the credit crunch and the fears of recession and inflation
But there is also an element of changing demand and long term changes, which will see prices increase in the long term. HH will continue to grow in size and this growth alone will fuel a continued rise in prices. Changing infrastructure e.g. the road from Bangkok will also lead to greater demand. In summary, expect some bumpiness especially in outer lying and lower quality estates. Long term I think HH prices will head north. Anywhere in walking distance to the beach is a good punt. PS I am not an estate agent
But there is also an element of changing demand and long term changes, which will see prices increase in the long term. HH will continue to grow in size and this growth alone will fuel a continued rise in prices. Changing infrastructure e.g. the road from Bangkok will also lead to greater demand. In summary, expect some bumpiness especially in outer lying and lower quality estates. Long term I think HH prices will head north. Anywhere in walking distance to the beach is a good punt. PS I am not an estate agent
That's exactly my thoughts on it JAJA, mainly because a) Hua Hin hasn't changed as a desired location for foreigners, its the global credit crunch that is starting to have an affect, and b) the general Hua Hin area of say upto 8 - 10km's away, a comfortable distance for the masses, has a heck of a lot of developing to go yet.
SJ
SJ
Do you have any views on whether that 'developing' is in itself, off-putting to those looking to settle and that the cycle may start elsewhere?Super Joe wrote: the general Hua Hin area of say upto 8 - 10km's away, a comfortable distance for the masses, has a heck of a lot of developing to go yet.
SJ
Talk is cheap
From the Global Property Guide website:
Will Thailand be the next stop on the Asian housing boom train? Not judging by the stagnant housing market which prevailed during most of 2007, when property prices fell by 0.8% over the year, or by 2.8% after inflation.
Nevertheless the global realtor CB Richard Ellis has boldly forecast that Thailand will be next in line for the “global investment surge”.
Prices of appartments have dropped even in Bangkok (acdg to Global Property Guide). I also think that developers will increase the prices of their properties due to soaring construction costs. But then because of inflation, it will be difficult to sell a very expensive and/or overpriced property. I guess owners who want to sell their appartment/house will have to wait for a few more months or years for the price to go up again.
Will Thailand be the next stop on the Asian housing boom train? Not judging by the stagnant housing market which prevailed during most of 2007, when property prices fell by 0.8% over the year, or by 2.8% after inflation.
Nevertheless the global realtor CB Richard Ellis has boldly forecast that Thailand will be next in line for the “global investment surge”.
Prices of appartments have dropped even in Bangkok (acdg to Global Property Guide). I also think that developers will increase the prices of their properties due to soaring construction costs. But then because of inflation, it will be difficult to sell a very expensive and/or overpriced property. I guess owners who want to sell their appartment/house will have to wait for a few more months or years for the price to go up again.
SJ,
From personal experience of trying to sell my place and buy elsewhere, I think a lot of UK agents are at a complete loss at how to value things at the mo. I suspect many will go under and in my local high street, one of the biggies has already shut up shop (Gascoigne-Pees).
I spoke to my agent yesterday and I thought he was going to top himself there and then.
From personal experience of trying to sell my place and buy elsewhere, I think a lot of UK agents are at a complete loss at how to value things at the mo. I suspect many will go under and in my local high street, one of the biggies has already shut up shop (Gascoigne-Pees).
I spoke to my agent yesterday and I thought he was going to top himself there and then.
Talk is cheap
Same as that, and SJ is spot on to, this is a far bigger picture than people realise, Right Move churn out all the stats and a lot of other sites like House prices.net are all linked to the land registry so you can see what house prices have achived in recent years my agent told me they are getting stupid offers and people are excepting them, on the basis it's only worth what's being offered, if you dont like it don't move, and that' the climate at this time.caller wrote:SJ,
From personal experience of trying to sell my place and buy elsewhere, I think a lot of UK agents are at a complete loss at how to value things at the mo. I suspect many will go under and in my local high street, one of the biggies has already shut up shop (Gascoigne-Pees).
I spoke to my agent yesterday and I thought he was going to top himself there and then.
I work in the cargo and shipping industry, before we really see it booming in the media a few years back, with all these cheap Chinese imports etc, i see this, at least two years before going totaly crazy. The container industry could not get empty containers back to Asia fast enough, so they just kept manufacturing new containers. From the U.K for many years we exported around 70% of containers empty just to get them back to Asia and if you wanted to rent one it would cost around £2,500 sterling, with this last boom the price came down to £700 sterling so we started exporting massive amounts of scrap metal, plastics, and waste paper, and just about anything that can be recycled,great for the environment.
We have now seen a very large down turn, there are huge container ships at anchor for months because of the lack of trade. Today i was talking to someone that is quite important, and i said to him that it will pick up soon, the Christmas trade normally starts in August and it go's crazy untill Febuary because we have to get the containers back to Asia, he told me that a lot of the Christmas trade is allready here, i must admit i was shocked, it's come early just to keep the ships working, if this is the case we are more slow than what we have though, and my industry is a very good indicator.
Does that apply to Dry Bulk shippers who are lugging raw materials to China? i.e. coal, iron ore and grains? Can't tell if the chart is reflecting a pullback from a huge spike or a sign of a serious contraction.kendo wrote: We have now seen a very large down turn, there are huge container ships at anchor for months because of the lack of trade.
http://www.dryships.com/index.cfm?get=report