Residential market to grow 5-10% in 2015: developers

THE RESIDENTIAL MARKET should perk up 5-10 per cent next year on economic growth of 3-5 per cent and new mass-transit routes, major developers say.

“We believe that the property market in 2015 will better than this year by up to 10 per cent,” Thongma Vijitpongpun, president and chief executive of Pruksa Real Estate, said recently.

Prices of homes and land will shoot up at least 5 per cent, they said.

The government plans to fire up infrastructure projects that will spur the economy at a faster gait than last year, while residential demand started to revive this quarter after home-buyers delayed purchase decisions since the first half of this year. 

This shows the desire to buy a home will still be strong in the coming year especially for occupancy, Thongma said.

Srettha Thavisin, president of Sansiri, said that if gross domestic product grew by 3 per cent, that would drive the property market up about 4.5 per cent, because on average GDP growth of 1 per cent translates into property-market growth of about 1.5 per cent.

Whether the property market will grow next year depends on whether the economy grows, he said. However, the market in 2015 will be certainly better than this year, which slackened about 10 per cent from 2013, he said.

“The market dropped more than 20 per cent in the first half of the year. It started to recover in the second half but that was not enough to catapult full-year market growth. 

“But in the new year, I’m confident that the country’s political situation will be stable. That will drive the country’s economy and also lift the property market over this year,” he said.

Pornnarit Chonchaisith, president of the Thai Real Estate Association, forecasts the property market in 2015 climbing by 5-10 per cent thanks to the government’s investment in infrastructure projects that will create demand for residences in metropolitan Bangkok, especially projects close to existing or new mass-transit routes.

“The Asean Economic Community’s coming into effect in 2015 will also fuel demand for homes both in Bangkok and in provinces near our neighbouring countries from both local and foreign buyers who use Thailand as their springboard for the AEC. 

“They will need accommodations, especially condominiums, to stay in,” said Atip Bijanonda, president of the Housing Business Association.

However, interest rates show signs of creeping up. That may stifle the property market. 

When interest rates rise 0.25 percentage point, that will increase the cost for home-buyers by about Bt250 per month for a Bt1-million mortgage, said Prasert Taedullayasatit, president of the Thai Condominium Association.

“But I continue to be confident that the [current policy] interest rate will be maintained or may increase in the second half of next year, so the property market will continue to grow better than this year,” he said.

 

Residential and land prices rising

 

Home-buyers will have to pay more, as residential prices are heading up 3-5 per cent.

Land will become 5-10 per cent dearer, depending on the location, while construction materials will also become 3-5 per cent more expensive. 

Inflation is forcing firms to mark up their residential prices, Pruksa’s Thongma said.

“We still saw townhouses in the suburbs of Bangkok going for Bt900,000 this year, but next year townhouses in the same location will start at Bt1 million or Bt1.5 million, depending on the location, after the upward pressure on building-material and labour costs,” said Issara Boonyoung, president and CEO of Kanda Group.

The Housing Business Association’s Atip said land prices in Greater Bangkok would increase 5-10 per cent from this year, because of the limited availability of land in some areas and the opening of mass-transit lines extending from central business districts to the suburbs.