Is it boom or bust for the property market? The answer is yes

So which is it? Is the market strong, as our sales figures and some others show, or is it weak, as the overall market figures show? The answer is both. The answer is both because there’s no longer a single property market.

You used to be able to look at growth in gross domestic product and overall property sales and have a pretty good idea of the state of the market, but that’s no longer the case. There are now several property markets that have their own driving forces and are behaving in a non-synchronised manner. If you’re a buyer or developer of property, it’s very important to understand which of these markets your project is in.

The most obvious market differentiator is Bangkok versus everywhere else. The Bank of Thailand reports that only 3 per cent of vulnerable consumer debt is in Bangkok and 97 per cent is in the rest of the country. This is reflected in property markets, where Bangkok isn’t seeing any dramatic worsening in mortgage-rejection rates despite rising national consumer debt.

The next is the super-luxury market versus everything else. According to the Agency for Real Estate Affairs’ figures for the first quarter, the market for units costing over Bt20 million constitutes 34.8 per cent of the total market. This is in contrast to the historic norm of 3 per cent.

So this segment has seen a huge increase in supply and demand. The question is whether this is a permanent or temporary shift in the structure of the market and how supply and demand will match in the future.

Another major difference in the market is mass-transit-related property versus everything else. The year 2013 was a strong one for property and 2014 was a weak year. If you look at first-month take-up rates, you can see a clear difference in the performance of condominiums launched within 300 metres of a mass-transit station. Those rates remained stable in those two years at 59 per cent and 58 per cent. Condos more than 1,000 metres from a station fell from 47 per cent in 2013 to 39 per cent in 2014.

This reflects our corporate strategic view that the mass-transit market is more defensive than the regular market and that it withstands downturns better and will benefit from upturns earlier.

The transformation and modernisation of Bangkok’s housing stock driven by the build-out of the mass-transit system and the adoption of mass-transit living is driving different patterns of property buying to go along with the different patterns of living.

But even this isn’t a detailed enough breakdown. Each station is its own micro-market with different supply and demand characteristics and price trends.

So for developers and customers, understanding these different markets and how each of them is performing and likely to perform over the next several years and in different economic environments is essential and no longer as simple as it used to be.

So is the market strong or weak? The answer is yes. And this means detailed understanding of the specifics of each sub-market and even micro-market is now more important than ever before for making investment decisions.