With the Thai stock market heating up and the baht strengthening, several economists have voiced their concern over possible bubbles in Thailand's property markets. In a way, this makes sense as some people who have made a lot of money from the stock market may invest in property. But it's debatable as to whether there is a strong case for a potential property bubble.
A property bubble occurs when there is strong demand from speculative buyers that drives high volumes of transactions and consequently rapid increases in property prices, until they reach unrealistic levels. A property bubble can also occur when developers are speculators themselves and start development without proper market studies and planning, leading to overbuilding.
A study of different property sectors in Bangkok has found that none of them fall into either of the two bubble scenarios, with the exception of the community mall sector, which will need a close watch.
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