Looking behind a home-building business: From the past to the present

For less expensive and smaller homes, the most common practice was to hire local construction workers and opt for a simple design so that the owner could simply tell the masons what they wanted. That did away with municipal civil engineering staff having to draw up the blueprint.

When Seacon founder Kobchai Sorsothikul started up his home-building business, he realised that consumers were neither used to nor aware of this kind of business. He began with building small and inexpensive homes but emphasised strength, economy and simplicity with a quick-to-build concept using prefabricated columns, beams, slabs and walls. The business was very well-received by customers with prices for a home starting at Bt70,000.

Some 30 years ago when more homebuilders entered the business and consumers had already started to get accustomed to home-building services, the prices of homes rose, the size got bigger and the design got more beautiful to capture the middle and high-end markets.

At that point in time, Seacon already developed home designs to meet higher prices. Seacon found that using prefabricated components for smaller and cheaper houses reduced flexibility in design. And to trade for beautiful design, the walls – save for the columns, beams and slabs – had to give way. This made building a house similar to the cast-install system because in designing middle and high-priced homes, one needs to take into account beauty, not just focus on function, simplicity and economy anymore. At present, when consumers are used to and welcome the home-building business, home building has greatly departed from 52 years ago with a wider dimensional variety in pricing, size, customer segment and design. Besides these, the main factor changing the business is that people’s lives have improved as a result of a growing economy, which increased their purchasing power, which gives them more choices. Interestingly enough, the business trend is now reversing in favour of more high-end house companies than small ones. Small-home building is in the province of small subcontractors.

A new turning point in the home-building business was when severe flooding swamped Bangkok in 2011. It triggered a migration of workers back to the countryside due to the lack of work during the floods and the rising price of agriculture products. 

A second wave of impacts on the business came when the government raised the lowest-guaranteed worker wage to Bt300 in April 2012, resulting in a continuing rise in the cost of houses with a big leap in the last two years and continued rising prices at present.

These two factors made a custom-built home that was affordable before out of reach to most people now. People are forced to lower their sights to the small condominiums that dot Skytrain lines instead.

Those who desire a medium- to higher-priced home might be able to absorb the cost for a while but they will eventually have to give in because of the inflation in prices. This pattern follows the situation in developed countries such as Japan, Singapore and Hong Kong.

The prospects for the home-building business will keep changing. In the big picture, the business will feature small houses for the masses by focusing on economy and functions rather than beauty and using more technology and depending less on labour. This trend will continue because the worsening labour shortage.

Can the labour shortage be solved by bringing in migrant workers? The answer is that foreign workers can only delay the change in the business for a short period of time. Eventually, the change will come as has happened to other countries, maybe in 10-20 years.

It is predictable that the labour shortage will become severer in one or two years because of the launch of state projects such as the Bt3.5-billion water management project and Bt2-trillion infrastructure project.

 

Social changes 

For that matter, a home-building company must constantly develop technology to catch up with the current situation and the social changes.

The way to go is for a technology policy to take priority over marketing. That would mean more components being produced in the factory such as staircases before being transferred to the construction site. However prefabrication will be reintroduced to the construction of small- and medium-sized homes. Caution is required to not take in more jobs than the workforce can handle.

Definitely, in the near and far future, exorbitant housing prices may force homebuilders to scale back house prices to make them affordable to people and try to educate them to recognise the value of function over business. Until then, the dream house is not beyond your reach.