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Thai housing market to be stable this year

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Under its chairman Parinya Patanaphakdee, the Thailand’s Real Estate Information Centre has been developing simulation models to assess the direction and trends of the housing market, utilising its data of information collected through the years. PUBLIC DOMAIN

Thai housing market to be stable this year

Thailand's Real Estate Information Centre (REIC) sees little difference between the overall housing market conditions of this year and last year, but chance exists for an expansion of up to seven per cent in 2020 if the Thai economy recovers from the current slowdown.

The REIC is a unit of state-owned Government Housing Bank, which reports to the Ministry of Finance.

Under its chairman Parinya Patanaphakdee, the REIC has been developing simulation models to assess the direction and trends of the housing market, utilising its data of information collected through the years.

In response to the market situation last year, the government launched three stimulus measures.

First, tax deductions will not exceed 200,000 baht ($6,400) for the purchase of houses and apartments under the first house project.

Second, registration fees on property transfers will be lowered and registration fees of estate mortgages will be reduced to 0.01 per cent for houses and condominium units costing less than one million baht – including new houses and second hand homes.

Third, a similar measure will cut registration fees for transfers and reduce mortgage registration fees to 0.01 per cent on the purchase of houses and condominium units worth no more than three million baht.

These measures resulted in the nationwide transfers of ownership rising to 373,365 units, worth a total of 875.18 billion baht last year.

This represents a 2.7 per cent increase in the number of units and a 4.3 per cent rise in value from 2018.

The numbers of estate permission requests increased nationwide in the second and third quarters of last year while the figure in the last quarter, similar to 2018, pointed to entrepreneurs changing business plans to develop new residential projects on the plain field.

In Bangkok and metropolitan areas, it can be seen that the adjustment has been continuing since 2016 with the number of units receiving construction permits throughout the country decreasing by nine per cent last year as condominium construction fell 24 per cent.

The number and proportion of condominium building permits have been decreasing continuously since 2016, signalling the volume of new condominiums during the next one-to-two years would be lower.

New residential units in Bangkok and metropolitan area decreased by 32.1 per cent last year. New condominiums dropped by 34.3 per cent last year while housing estates fell 29 per cent, meaning there are vacant units remaining on sales since 2018.

For this year, the REIC noted positive factors such as low interest rates, government stimulus measures, easing of loan-to-value regulations, and negative factors such as an economic slowdown, the 2019 Novel Coronavirus outbreak, and the ongoing Sino-US trade war.

The REIC expects adjustments in the residential sector this year with the total transfers of ownership of all types of housing units around the country rising to 372,500-400,660 units, worth between 853.1 and 917.1 billion baht, which represents an expansion of between -0.2 and 7.3 per cent from last year.

Ownership transfers in Bangkok and its vicinity are expected at 197,500-214,300 units, which will account for 53 per cent of all units and 67 per cent of value of all transfers across the country.

Transfers of condominium units nationwide will be approximately 117,400-126,780 units, worth between 284.36 and 305.7 billion baht, with Bangkok and its vicinity accounting for 73.6 per cent of the volume and 78.1 per cent of the total value.

A slowdown in ownership transfers to Chinese buyers is expected in the first half of this year in light of the coronavirus outbreak but it will not have a significant impact as they account for only six per cent of all buyers.

Residential units from the launches of new projects in Bangkok and its suburbs this year will be around 114,400-122,600 units, comprising 55 per cent condominium units, or between 62,900 and 67,400.

Applications for subdivision permits throughout the country is estimated at between 97,500 and 100,400 units with Bangkok and its surrounding provinces accounting for 58.4 per cent.

The number of applications for building licences nationwide is estimated at between 292,100 and 300,900 units, with approximately 27.4 per cent for condominiums, or between 80,000 and 82,400 units.

Applications for building permits in Bangkok and its suburbs is put between 129,000 and 132,900 units with approximately 51.1 per cent for condominiums or between 65,900 and 67,900 units, meaning that 82 per cent of condominium projects receiving building permits throughout the country will be located in Bangkok and its vicinity.

From the forecast above, it may conclude that the real estate market this year is likely to be relatively stable but still has the potential to grow by five-to-seven per cent if the country’s overall economy improves. This will create employment and confidence in property buyers.

THE NATION (THAILAND)/ASIA NEWS NETWORK

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