The Bangkok property boom could be set to burst within two years.
This worrying news, which has yet to appear in any mainstream news outlets, comes from the President of Thailand’s Agency for Real Estate Affairs.
Dr. Sopon Pornchokchai, a respected Thailand property industry veteran, revealed that the value of newly launched property between January and November 2017 was the highest in the 24 years that the agency has been surveying the market.
The value of new units – some THB 408.97 billion – was 14 percent higher on the same period last year.
At the same time, Dr Sopon said the number of new developments seen throughout 2017 will be 13 percent less than during 2016, while the number of units will increase by 8 percent year-on-year.
The annual survey also discovered the average price of new units will be THB 3.81 million for 2017 – up 13 percent from the THB 3.36 million in 2016.
Dr.Sopon said this implied that Bangkok property markets welcomed higher-middle and higher income housing units. instead of the lower-middle and middle-income ones.
Most importantly, he said this phenomenon of growth of the Bangkok housing markets exhibited a boom which will result in a bubble.
If this trend continued into 2018, perhaps, the bubble burst will be witnessed in 2019 or 2020, he warned.
The Bangkok property boom today comes from the cheap cost of debt.
“If, one day, it is realized that speculation could not come with ample return, sales might suddenly drop. Difficulties could then arise,” Dr. Sopon added.
Some measures that must be considered include supply controls, compulsory escrow accounts, larger down payments of up to 20 percent, as well as the introduction of property tax and betterment tax to curb property speculation.
“It is very crucial to follow the market situation closely with scrutiny, in order to introduce measures to control the markets efficiently,” he concluded.