'First-car scheme has hit people also trying to buy cheaper homes'
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Up to 10 per cent of people who try to buy homes at prices up to Bt2 million from Pruksa Real Estate Plc have suffered knockbacks for mortgages because of "substandard" credit scores after they bought a vehicle under the government's first-car scheme.
Pruksa chief business officer Piya Prayong said the company had tried to help customers by suggesting they find co-borrowers to increase their earnings enough for banks to approve the loan.
Normally, commercial banks limit mortgages to people who have incomes under Bt20,000 a month. If they have other debts to shoulder, the bank will reject their application for a mortgage. That kills about a quarter of total applications.
In the first five months of this year the company has had the same ratio of rejections – a rate of about 25 per cent – after investigating customers banks have knocked back. It found about 10 per cent bought cars via the government’s first-car scheme and this hit their capacity to repay a loan to buy homes, he said.
While sales of homes priced under Bt2 million have been hit by the first-car scheme, the firm still had pre-sales worth Bt12 billion. Over half or Bt7 billion were from residents buying single detached houses and townhouses. The company had kept its revenue target of a total of Bt34 billion by the end of 2013, he said.
The company reported total revenue Bt6.3 billion and net profit Bt773.26 million in the first quarter of this year.
The demand for residences at prices under Bt5 million per unit was still stronger than others segments, he said.
Meanwhile, prices this year have increased by five to 10 per cent in some locations.
“Up to 20 per cent of home prices have risen following land price increases of between 20 and over 100 per cent in some locations when property firms have competed to buy land in popular location but supply in the market limited,” he said.
Home prices have also risen because of the price for raw materials has increased by five per cent and labour costs have also gone up amid a shortage of labour, he said.
