Cheap oil, steady construction costs keep home prices stable
Home prices should remain stable this year thanks to low oil prices and the cost of construction materials remaining near last year's level, property experts said.
Pruksa Real Estate president and chief executive officer Thongma Vijitpongpun said that if the global oil price stayed below US$50 per barrel, that would reduce logistic costs by more than 10 per cent. This is a good sign that property firms will be able to keep prices flat, when normally they rise by 3-5 per cent a year.
Meanwhile, prices of construction materials such as cement and steel are also stable.
Land & Houses president Naporn Sunthornchitcharoen agreed that home prices would not go up, but noted that they also would not go down, as the cost of land would continue to increase in some locations.
"The drop in oil prices will cut logistics costs by 10-15 per cent, which will lower overall residential costs by 1 per cent. However, [the cost of] construction materials is staying the same, so residential prices will be stable this year," he said.
Saenphin Sukhee, managing director of Golden Land Residence Co, a subsidiary of Golden Land Property Development, said his company would also keep its prices at the current level, as construction-material costs were being maintained or even dropping in some cases. However, the company cannot cut prices because the cost of land is rising by 5-10 per cent, he said.
"We believe that maintaining [current] prices will help boost the demand to buy homes this year, both low-rise residences such as detached houses and townhouses and condominiums, after people delayed their decisions to buy a home last year," he said.
