Low purchasing power cited for condo sales slump
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THE CONDOMINIUM market over the remainder of the year will be quiet due to a lack of purchasing power, while the supply of new retail space in greater Bangkok is on the rise, according to property consultancy Colliers International.
The steady outlook for the condominium market is caused by economic sluggishness and the ongoing drought crisis, which have created domino effects for the market.
Meanwhile, the level of new retail development has risen each year for a decade, with a spectacular increase in both community malls and shopping malls in outer Bangkok this year, due to stronger long-term economic prospects.
Surachet Kongcheep, Colliers associate director for research, said banks were now more stringent about the provision of housing loans because of high overall household debt at more than 80 per cent relative to gross domestic product, while the ongoing drought crisis had “terrorised” low-income people, and mainly farmers.
“The declining purchasing power among low-income people has been reflected in low sales of condominiums priced under Bt100,000 per square metre, a segment that targets low-to-middle-income customers,” he explained.
Sales of condominiums in this category launched in the first half of this year came in at around 7,600 units, representing 63 per cent of the total of some 12,000 new units on the market.
The sales rate is very low when compared to the rates of 80 per cent, 82 per cent and 89 per cent for condos priced from Bt100,001 to Bt150,000, Bt150,001 to Bt200,000, and Bt200,001 to Bt250,000 per square metre, respectively, he added.
Because it is now more difficult for many potential homebuyers to get a mortgage, the ownership transfer rate has continuously dropped since last year.
In the first quarter, more than 11,000 condo units were transferred, decreasing from around 13,000 units in the same period last year.
The full-year transfer rate last year was around 53,000 units, but this year will be even lower, said Surachet.
He said around 50,000 condominium units would be launched for presale before the end of this year, but only about 20,000 units were launched in the first half.
“It is likely that many developers will not be able to reach their presale goals in this sluggish economic situation. Even worse, more than 40,000 condominium units were previously expected to finish construction this year, but only around 9,650 units were completed in the first half,” said the associate director.
