The property market in Bangkok and its suburbs could fall by about 5 per cent this year due to a host of negative factors.
These are: the end of propertytax incentives last year; higher interest rates; rising construction costs; and the Bank of Thailand’s policy to limit mortgages to 90 per cent of a condominium’s value since January 1.
Meanwhile, the Government Housing Bank (GH Bank) could increase its mortgage interest rate if the central bank’s Monetary Policy Committee again increases the policy rate at its next meeting, president Worawit Chailimpamontri said yesterday. The committee hiked the rate by 25 basis points at its January meeting.
Real Estate Information Centre directorgeneral Samma Kitsin said newly registered residences came in at 105,200 last year, up 11 per cent from 95,000 units in 2009.
But the centre estimates new registrations this year will fall below 100,000 units, due to the changing market environment.
The market recorded high growth last year following the expiry of tax incentives in March, a move that doubled yearonyear sales in the first quarter. Now that the incentives have gone, the market will return to normal, said Samma.
Rising interest rates, higher construction costs and the central bank’s decision on restricting condominium loan values have impacted homebuyers’ decisions to purchase homes, especially condos, which accounted for 54 per cent of all registrations last year.
“We believe the condominium market will fall to about 50 per cent of the residential market this year, as the resale market will grow more than that for new condominiums because resale prices will be about 10 per cent lower on average than new project launches,” Samma said.
GH Bank has tried to boost mortgages by launching new home loans for nonsalaried people who have enough to buy a residence, said Worawit.
New mortgage lending by all commercial banks, including GH Bank, was Bt356.27 billion last year, 11 per cent higher than Bt318.86 billion in 2009.
GH Bank has 34.43 per cent of the mortgage market, 4.6 percentage points lower than its share in 2006.
Worawit earlier said 5 per cent of the bank’s clients were lowend customers, with the remaining 95 per cent being social welfare and retail clients in a ratio of 60:40.
He added that the bank might revise its target of Bt94.6 billion in new mortgage lending for this year, lifting it to Bt100 billion if necessary, should there be sufficient demand.
This year, the bank expects net profit to reach Bt6.4 billion, from Bt6.35 billion in 2010. It expects its spread to decrease from 2.39 per cent last year to 2.25 per cent, as it cannot make a bigger adjustment in its lending rate because of the government’s policies.