The “market value” of anything, whether it be real estate or any commodity, is the price a willing vendor is prepared to sell at, and the amount a willing purchaser is prepared to pay.
There are other key assumptions to be made but, broadly speaking, this is the gist of the definition of market value.
In respect of real estate, it is NOT, contrary to many people’s opinions, the sum of the asking price for the land on which a property stands PLUS the cost to build the house or shop-house or whatever.
That is the replacement cost which is usually used by insurance companies, quantity surveyors, builders and the like.
Current market value is also NOT the amount a person bought the property for five years ago plus the amount spent on painting the external walls pink or changing the cupboard doors in the kitchen plus, of course, the depreciation in the Euro!
The Chiang Mai market is quite unlike many other property markets in Thailand and, whilst, of course, there are cycles, the huge amount of new property coming to market plus the propensity for many purchasers to buy new homes or condos means that, with some notable exceptions, prices and the volume of transactions of second hand properties over, say Baht 7-10M remains relatively low.
Yet, we continually see vendors whose expectations on value increases are the same as if they had bought in Phuket or Bangkok. That’s not the Chiang Mai market.
Yet we often wonder: Is it just us, active in the market every single day seeing what prices properties do actually sell for who thinks differently, or is the vendor always right about the asking price?
What do you think? Feedback welcome…