As the Thai economy emerged from the aftermath of the Asian Financial Crisis over the past ten years, the capital of Thailand, Bangkok, has seen a new wave of rapid urbanisation. Across the city, a diversity of residential developments has mushroomed, responding to rising incomes, better and expanding infrastructure, evolving demographics, tense competition, wider access to financing for mortgages and changing preferences and lifestyles. With the new supply of residential space, particularly condominiums, continuing to expand annually, the question of whether there is an oversupply or even a bubble in the housing market is often raised. Based on the sales rates of new projects (which are healthy), there is no clear indication that this is the case. However, a good indication that the new residential developments are sustainable would be a robust, transparent and liquid secondary or resale housing market.

The Thai data on residential supply, demand, occupancy, prices and rents and the time a property has spent in the market is quite incomplete. The private sector does a reasonable job of tracking specific sub-markets, while various government agencies collect data such as new housing registration. However this information is only somewhat useful in analysing market conditions. In addition, there is very little data on the resale of residential property in Thailand. Based on anecdotal evidence alone, it is hard to make a complete assessment of the residential property market conditions there. As highlighted in Jones Lang LaSalle’s 2012 Global Real Estate Transparency Index, Thailand’s score has continued to improve. Much of this has been driven by better disclosure on commercial real estate, particularly from listed property funds. Higher transparency would certainly be achieved with better data collection and reporting on residential resales.

However, the anecdotal evidence suggests that the process and market for reselling residential property remains limited. There are a variety of reasons for this, including low leverage on residential property, which does not put pressure on owners to sell, buyer preferences towards new homes rather than those that have already been lived in, the fact that Thai families traditionally live with multiple generations under one roof, the conversion of primary residences into rental properties and a prevailing notion that real estate can always be sold in the future at a higher price. Nevertheless, if the housing market is going to continue expanding, a more robust and liquid second-hand market will have to develop.

As the residential market continues to grow and evolve, the resale and leasing markets will need to become more liquid and transparent. Fundamental changes in how people study, work (in multiple careers and jobs), cohabitate (e.g. in nuclear rather than extended families), socialise (e.g. in public places rather than at home) and retire (e.g. by downsizing and unlocking equity) will drive individuals to change residences more often. Furthermore, in the past, most individuals saved for many years to buy a home in cash, but today mortgages are much more widely available. Mortgage lending, outstanding, has risen from THB 427 billion in 2003 to THB 1.2 trillion in 1Q12. As individuals change residence they will need to resell their existing homes as soon as possible to minimise the financial costs of their new living spaces, further contributing to a more liquid and transparent residential resale market.

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