Market expected to contract by 10%
THE THAI PROPERTY market will likely shrink by 10 per cent this year in view of the upcoming loan-to-value reduction measure, say industry leaders.
The market is expected to suffer a 10-per cent contraction with the Bank of Thailand (BOT)'s new regime on home mortgage coming into effect on April 1, says Issara Boonyoung, honorary chairman of the Business Housing Association in an interview with The Nation. The BOT move will greatly reduce the purchasing power of low-income homebuyers, he added.
The market hit a new high last year, recording sales of Bt512.17 billion for 121,193 units, up 18 per cent from the previous year. Properties sold comprised 70,066 condominium units worth a total of Bt293.72 billion, up 19 per cent from 2017; 18,601 single-detached houses with a total value of Bt122.58 billion, an increase of 22 per cent; and 30,914 townhouses worth Bt87.57 billion, representing a 13 per cent rise from the previous year.
The central bank measure will also dampen sales of second and third homes with their mortgage ceilings reduced to 80 per cent and 70 per cent of the property's value, said Thongma Vijitpongpun, chief executive officer of Pruksa Holding Plc. The market posted double-digit growth last year, he added.
Meanwhile, commercial banks have continued to restrict home mortgage approvals to applicants through tougher criteria. The lower income segment, which accounts for 10 per cent of total market value, has been badly impacted, he said.