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2002 Summary of Housing Market Situation in Bangkok

          At the beginning of 2002, the market seems attractive resulting from various government promotions on home buying. However, this will not last long due to the fact that the overall economic growth will be slow down (2% GDP growth in 2001 and 2002 compared with 4% in 2000). There appears some delusive phenomena. For example, the good sale rate of newly launched housing projects to date does not imply the recovery of the market. Exception cannot be made norm. They are mainly detached houses and some well studied townhouses of small size and of market niche. Still many developers also need to cut cost to stay competitive with existing supplies. As observed, of all the new projects in 2000 - 2001, none was developed by new investors but rather by those who need to restructure their debts or those listed ones who always need some activities to carry out.
          The government should provide confidence to home buyers which will encourage them to buy to boost the market. As observed, it was already 4 years but the standard / fair contract (to protect the buyers) and the escrow account have not yet been implemented. That the government tries to promote home buying (without proper discounts) may worsen the situation. It may general fake demand and mal-uses in reserves.
          Considering investment, if a property can be sold at a forced sale price of 70% of the open market value, it would be attractive to invest. Proper market comparison needs to be exercised by home buyers. Good sources of cheap homes can be at asset management units of financial institutions and at fair public auction houses.
          The market is expected to be recovered in 2003 - 2004. At that time costs of construction will be some 60% above the 1996 costs and the supplies will be largely absorbed. Then people will realize that buiding a new house is a lot more expensive than buying an existing one. In long run, housing industries will be of shrinkage in size due to the resale market. New developers must be more professional and reliable.
          What is needed to be careful, is the releases of information from beneficiaries involved via various media. Many may be some propaganda instead of fact. Home buyers and investors must be more knowledgeable in the future.

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