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Covid Crash - The real deal


We accept that it is impossible to reach everyone, but we hope people will have read these articles with an open mind and recognise that a lot of thought has gone into dissecting the arguments for and against a “Covid Crash” in Phuket property. We have never claimed that 2020 is going to be a banner year for real estate on the island, but we also do not believe that the market is going to be offering historically deep discounts any time soon.

We would like to use our final segment in this series to address some specific arguments which have been presented to us by those convinced we will soon be able to find bargains galore. Some of our responses will obviously revisit what we have already written, so if you think you’ve read some of this before, well… you probably have.

1. The job of property professionals is to talk property up not down. That may be, but we have not simply said: “Things will be fine because we say so.” We have devoted almost 5,000 words to explaining what we believe to be an informed position.

2. Another agent has told me to be ready to snap up bargains. Is this just sales hype? Yes and no. There will be some bargains, and some lucky buyers may pick up properties at discounted prices. But for the most part, our instinct tells us yes, a market offering bargains galore similar to some Western markets after a property crash is just sales hype.

Wherever most property markets have collapsed in the past, a lack of liquidity has almost always been a factor. Rising interest rates, banks not lending, foreclosures – these create imbalances in property markets which can lead to widespread bargains. Because properties in Phuket are almost entirely bought for cash, the market is far less susceptible to a crash.


Further, property sales here are driven by tourism. There have been nearly a dozen events in the past 25 years that have caused tourism in Phuket to suffer, and which people at the time thought would negatively impact the property market. The only one which may have had an impact was the Asian Crisis in 1997 because there was greater borrowing at that time. But the property market in Phuket was in its infancy then, and foreign borrowing is almost non-existent now.

3. We’ve not yet seen the full economic implications of a protracted lockdown (e.g. the consequences of job losses, rental losses, bankrupt businesses, higher taxes to claw back government handouts, depreciating property values in other countries, negative equity, mortgage default, negative sentiment, fear).

No we have not, but let us address each of the above:

Job Losses – If someone is still paying the instalments for a new build budget condo, and their finances are extremely tight to begin with, then this could happen. It is a point we have conceded already. But most people buying condos in Phuket already own property elsewhere and are liquid enough to buy a property for cash. Unless that person’s only remaining asset in the world is their Phuket condo, a job loss will not force them to sell.

Rental Losses – the vast majority of people who own rental properties in Phuket have them to augment their income, not as their sole source of income. In a pinch, they will be selling their far more liquid stock and bond portfolios before any properties.

Bankrupt Businesses – Anyone with a business that goes bankrupt will have their personal assets legally separated from their business assets. Bankruptcy would not force the sale of their Phuket condo, unless it was owned by the company. Apart from that, the same would apply to anyone who lost a job (see “Job Losses” above).

Higher Taxes – raising taxes on those who can afford it in order to recoup some of these stimulus payments will not damage the economy. Vast wealth inequality is far more destructive to an economy than forcing the wealthiest individuals and corporations to pay higher taxes. The notion of taxes as an economic evil is a supply-side myth which has sadly come to be accepted as gospel.

Depreciating Property Values in Home Countries/Negative Equity/Mortgage Default – the assumption here, we can only gather, is depreciation sends the property into negative equity, which leads to mortgage default. Again, this has zero impact unless their Phuket property is the only thing they have left to sell.

Negative Sentiment/Fear – we’ve never known masses of people to sell their properties because they were scared.

4. You refer to Phuket returning to normal. It will in time, but this economic damage is unprecedented and the full implications are as yet very unclear.

It is widely accepted that this economic downturn will be the worst since 1929 (if it is not already), and we do not dispute this.

But if someone’s life is turned upside down financially, and they decide to put their property on the market, they will not immediately reduce their price if the property is not selling. Eventually, they might drop the price by 5% or 10%, but this is not Marbella, Las Vegas or Florida. Phuket has never been a boom-and-boost market, and we don’t expect the COVID-fallout to turn it into one.


by Thai Residential Phuket Property Guide

This article is from the 2018/2019 Thai Residential Phuket Property Guide. To download the 2019/2020 Guide visit

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Thai Residential
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Moo 4, Patak Road
T.Rawai, Phuket 83130
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