Despite Persistent inflationary Pressures, Phuket Island is Still an Affordable Place to Live

As Katheleen Norris, the American poet and novelist, once said: “In spite of the cost of living, it’s still popular”.

Over the past few decades, we have seen prices across the broad economy moving steadily higher on the island. As its popularity increases, and more capital investment pours into its economy – not just from tourism, but also from foreigners making Phuket their home – we are likely to see these price trends persist for some time longer.

But this is not just a local phenomenon. We have all seen inflation enveloping the whole world, with the cost of groceries, housing and transportation steadily increasing. This is undoubtedly causing people today to pay more attention to what they can buy for their money.

There are certainly plenty of upsides for living in Phuket. It has gorgeous food and an amazing culture. The scenery is mesmerising, the weather is fantastic, and there’s so much to do and explore that the days just aren’t long enough to do it all.  

But living costs can vary wildly, depending where on the island someone stays and their lifestyle choices. ‍Of course, for those who like the finer things in life, their lifestyle will be expensive in Phuket too. Luxury accommodation, high end automobiles, Michelin Star dining and designer clothes are pretty much the same price here in Phuket as they are anywhere else in the world.

But for anyone who is not, generally speaking, an extravagant person, they can live quite comfortably in Phuket for less than half the cost of North America, most of Europe, Australasia or even some of Asia’s major cities.

Inflation is an unwelcome by-product of the massive increases in debt and monetary printing, some of which is home grown, but for Phuket, it is mostly imported. Thailand’s current national debt is the highest on record but it pales in comparison to many larger economies across the world, many now with debt to GDP levels of over 100%.

As the Nobel Laureate economist Milton Friedman once stated: “Inflation is, and has always been, a monetary phenomenon”. The more money being printed, the more we will see the devaluation of the existing money supply, which inevitably means higher prices.

 The US national debt, which at the time of writing is edging towards US$35 trillion, is of obvious concern. Although the mind boggles at the enormity of this number, it is not just the US exporting inflation. Many countries still have the printing press running at full speed, and some of this newly printed money undoubtedly arrives on the sandy shores of Phuket.

If Phuket residents have had any gripes over the last few years, it is about the rapid increase in property rental prices. As most people are aware, property prices have been rising on the island, and rental prices have been keeping pace. Much of this is down to the rapidly expanding population (including a significant number of new foreign residents), on a small island with a limited land supply. However, unrealistic property prices and insane rental rates may be eventually remedied when the large number of new builds currently under construction come on to the market in the years ahead.

Although we may all have to accept the fact that inflation is not going away any time soon, there are still plenty of positives for foreigners considering a move to Phuket. Government fees and taxes when purchasing a new condo, for example, are a maximum of 3.15% of the purchase price. Compare this to Spain where purchase taxes may be as high as 11.5% or Belgium with a property transfer tax of 11.3%. Although Thailand’s taxes are certainly not the lowest in the world, they remain incredibly competitive.

Running your home is cheaper too. Yearly property tax which can be in the thousands of Pounds, Euros or Dollars elsewhere, is a trifle by comparison here in Phuket. As is water, electricity and gas. The same can be said for running a car – from valet services, fixing a puncture, or car servicing costs. And filling the tank can be less than half the price of Europe.  

Grunts of disapproval from foreigners usually comes from the prices of international supermarkets (all imported goods), including wines and other alcoholic beverages. However, for the adventurous with a ‘when in Rome’ mentality, who may even prefer the local markets and cuisine, as well as Thai beer, then Phuket is easily affordable for anyone, even those restricted to the lowest of budgets. 

Getting around is also negligible compared to most other countries. A three-day unlimited Smart Bus pass which allows travel all the way up and down the west coast is only 399 Thai Baht. And taxis are also a fraction of the cost compared to most western nations.

And it is worth pointing out that while we would consider Phuket to be relatively cheap, it is in no way the cheapest place in Thailand to live. If you really want to get more ‘bang for your Baht’, then the further you go away from the cities, out in the ‘boonies’, the cheaper you’ll find most housing options and consumer items. But Phuket is not out in the middle of nowhere, it has a modern airport, amazing infrastructure and is rapidly becoming a global tourist hotspot. For foreigners wanting to live in paradise, and who have a frugal mindset, they can do so without breaking the bank. 

According to The Economist magazine’s Big Mac Index, introduced all the way back in 1986, Thailand still remains one of the cheapest places in the world to buy McDonald’s iconic burger. Although Big Macs aren’t likely to be the first choice for most affluent holiday makers or Phuket residents, it does provide us with a perfect price gauge.

The Coca-Cola Index may also be used, which shows even more dramatic price comparisons.  The most expensive place in the world to buy a 33cl bottle of Coke is in Switzerland, and at US$4.75, is more than seven times the cost of an identical bottle in Phuket. 

Of course, for a foreigner moving to Phuket, the strengths and weaknesses of the Thai Baht can also have a significant impact on spending power. It is worth noting that for many foreigners, especially those who hold US Dollars, the weaker Thai Baht has negated somewhat any rising prices over the past few years.