Thailand Fears Property Bubble Formation

The President of the Agency for Real Estate Affairs in Thailand has cautioned against a possible bubble formation in the country’s property market.

Dr. Sopon Pornchokchai stressed that a bubble could form in 2011 and 2012 due to the rapid construction of low-priced housing, as property developers are rushing to participate in the nation’s Board of Investment homes project. "When there is more supply, it is likely that there would be more speculation," he said.

The Royal Thai Government must not support any "unnecessary" acquisitions of second homes that could lead to speculation in the sector, he added.

He also urged buyers to manage their finances well, and lenders should be very wise with their financing, most especially in the case of projects being built in poor areas.

The Agency forecasted that the value of new home units being released during this year will be worth THB158.4 billion (US$4.84 billion), which is a 15-percent drop on the value of homes launched last year.

Kandy Bong
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