Banks to see impact of slower condo supply in 2015, SCB says
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Siam Commercial Bank, the largest mortgage lender of the commercial banks, says the lower supply of new condominiums this year might have an impact on new housing loans in 2015.
Pikul Srimahunt, first executive vice president of SCB, said the condo supply this year was expected to grow by only 10 per cent compared with 50 per cent in 2012. The new supply is mostly in mid-to-low-end projects.
The construction of condominium projects requires about two years, so the impact on mortgages from this slower growth should be seen in 2015, she said.
The transfer of condominiums to home-buyers remains strong thanks to the massive development of new projects in the past two years, and this momentum will continue to support lending growth into next year.
SCB is aggressively focusing on the condominium market by targeting a loan proportion from this segment at 30 per cent. The bank projects outstanding loans of Bt420 billion this year.
So far this year, the proportion of condominium loans has climbed to 20 per cent, she said.
Kasikornbank executive vice president Chatchai Payuhanaveechai said the supply of new condominiums would drop significantly when construction of the mass-transit system in the outskirts of Bangkok is completed.
KBank is among the main mortgage lenders in the condo market because the rate of non-performing loans in this segment is lower than for low-rise projects such as townhouses and detached homes.
Of its total new housing loans, 40 per cent are for condominium projects, Chatchai said.
He said new housing projects were slowing steadily, especially in the second half, when KBank anticipates 50,000 new units, down from 60,000 in the first half. There will be a total of 110,000 new units this year, down from 120,000 last year.
He noted that the lower rate of domestic consumption had an impact on durable goods, including the housing market, so overall mortgages this year were expected to expand by 9 per cent, down from growth of 11.4 per cent last year.
“Developers have scaled down unit sizes in order to offer lower prices to attract buyers. We found that the average unit price this year had dropped to Bt2.7 million from Bt2.9 million last year,” he said.
