Buying a house . My thoughts....

[Guest]

I would also be very careful about real estate in Thailand, but not because of anything Greenspan has or has not done. Thailand is quite capable of creating its own bubble and economic problems, something well established by the '97 financial crisis.

 

To understand how bad that crisis was consider these two facts: (1) the year following the crisis, the economy contracted by 10% and (2) two-thirds of the loans held by Thai banks were in default (about 11% of the loans held by foreign banks were NPLs).

 

The problems in Thailand run deeper than they do in most developed economies. Everyone here focuses on the fact that Thai law generally prohibits foreignors from owning property (I know there are exceptions under the BOI for factories, but I don't think there are relevant here), but tend to overlook the fundamental problems with title and the legal system in general. On top of that you can add the economic issues discussed above. In Thailand, which is not as transparent as the US or Western Europe, those economic risks are even higher. Remember, the '97 crisis caught most people here completely by surprise, and it happened very suddenly.

[Guest]

legover said:i'd be extremely cautious going into the property market at this late stage in the cycle.

today's euphemism: leverage based upon soaring asset prices is "liquidity".

did anyone mention the derivatives time bomb yet?

Superb summary!

Thank you, Legover, for taking the time to write and post about this crucial topic.

.

[whosyourdaddy]

Thailand is probably cheaper to Rent than most places. I was renting a 2.7 million house for 8000B a month. The mortgage payment alone would be alot higher than this but there are other factors to consider when buying and renting

 

When you are renting, especially in Thailand there are very few laws to protect you. Loss of damage deposit, being kicked out with little notice are the reality and in some areas the norm. Also if something goes wrong with the house- water, power etc it is much more difficult to get it fixed if you have to rely on the landlord. Also if you want UBC, hi speed internet, international phone line etc it is much easier if you own the house to get it installed.

 

With little to no community /property tax,and cheap housing insurance, it is not like the west where you have huge outgoing expenses year after year.

 

I had a piece of land in Canada. Waterfront property in the middle of nowhere. 45 mins from any city. Nice property but nothing developed on it yet. The property tax alone was 100,000B (3000$C+) per year. Here in thailand it would not cost you a penny just to sit on it and wait till retirement to build a nice summer home. In canada it would have cost me millions of bhat. Not worth it.

 

The only real expense is the 12 % income tax when we buy a bigger place and rent out of BKK home. But being thailand there are ways around this with the company owning the house or transferring the house in to family members name who does not yet own a house.

 

Land is the only thing that they are not making more of. I would grab as much as it as you can reasonably afford. Thais tend to buy at there upper limit and when hard times come, there is no room to breath for them and the default on the loan. Seeing that our mortgage payment is 10% of our household income, we are expecting to be unaffected by the pending economic crash.

[Prosal]

I'm checking the market to buy an apartment, not as an investment, but as a second home, and consider Bangkok among other locations like Buenos Aires, Sao Paulo and Rio, where real estate prices are attractive and where ? is strong.

 

Yet I didn't imagine so abundant the high-end projects in Bangkok (more than 100 referenced on this site) ; prices, from 50 000 to 80 000 baths per square meter, are also very high compared with the Argentinian or Brasilian markets (for the same kind of projects).

 

Is the enquiry for upmarket apartments that strong in Bangkok to absorb all those projects, which, from what i read, are sometimes sold at 40% before construction ?