Condominium prices are expected to rise further by 20 to 25 per cent this year with the number of condominiums seeking new registration set to increase by more than 100, according to the Treasury Department.
Director-General Vinai Vittavasgarnvej said the department had valuated 4,600 registered condominiums nationwide, most of which are located in Bangkok and its environs, and provinces where there are many tourist sites.
The survey found condominiums with the highest prices now are located in the Sukumvit area, with unit price over 200,000 baht per square metre. It is projected that over 100 condominiums will seek registration this year. Most are located along the elevated and underground mass transit routes, and electric train routes and economic zones.
Mr Vinai said Treasury Department personnel have been sent to assess land prices in all provinces nationwide as part of an overall survey reviewing and re-valuating them for adoption in the 2012-2015 accounting period, set to begin Jan 1, next year.
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While there seems to be a predominant view, from many in the industry and market analysts in general, that prices will continue to rise for the foreseeable future in this market, there are reasons for care and prudence. First amongst these is that we are still in tough economic times and the rise in the price of a commodity that is directly related to the welfare and employment picture would seem to fly in the face of market logic. Further, the whole issue of if there is a real estate bubble in Thailand can be debated at some length.
The issue of condos, especially in the greater Bangkok area, gives rise to significant cause for debate regarding whether price fluctuations of late are out of proportion with the general market and a correction may well be imminent. If a correction is indeed coming, we need to recall that when markets correct, they tend to over-correct, which means that the downside potential can indeed be troubling. In the event of a correction, it is possible for the market to fall 25% or more in the space of a year or so. Needless to say, this could cause considerable economic and social pain, in particular for those unfortunate enough to have purchased at the most inflated range of the price spectrum. Rosy predictions are fine, but are they backed up by market factors? Just a thought!