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Developer sentiment index, while remaining positive, slips in 3rd quarter

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In the third quarter, housing developers’ sentiment for the next six months saw a decline, primarily driven by growing concerns about employment following the government’s announcement of a minimum daily wage of 400 baht for the next year. Vichai Viratkapan, the Acting Director-General of the Real Estate Information Center (REIC), reported that the sentiment index for the upcoming six months dropped to 60.1 in the third quarter of this year, down from 62.1 in the previous quarter. Nevertheless, it’s worth noting that the index remained above the median of 50.0, indicating that developers still maintain a positive outlook on the overall property market for the next six months.

Among the six issues addressed by the REIC in its survey of both listed and non-listed developers, employment recorded the most significant decrease, falling from 62.1 in the second quarter to 56.8 in the third quarter. Songkran Issara, CEO of SET-listed developer Charn Issara Development, expressed his concerns about the policy to increase the minimum daily wage, emphasizing its potential impact on the overall economy.

According to Mr. Songkran, the wage hike’s impact will be substantial, given that the economy has not yet displayed robust growth or the necessary momentum to absorb additional costs, which would result in increased labor expenses for business owners. He also highlighted that the country’s economy has shown signs of recovery from the impact of the Covid-19 pandemic, largely driven by the resurgence of the tourism sector. However, global sentiment remains unfavorable, and concerns persist, both domestically and internationally, including conflicts and disputes such as the situation between Israel and Palestine.

The REIC’s report further reveals the second-largest drop in the expectations index, particularly in performance, which decreased from 69.4 to 65.0.

Mr. Vichai pointed out that the expectations index on costs was the only one to rise, with a 2.1-point increase. This suggests that developers may be able to achieve greater cost reductions compared to the second quarter.

The REIC also documented housing developers’ sentiment index regarding the current situation, which slightly improved to 49.7 in the third quarter from 47.5 in the second quarter but declined from 51.8 in the third quarter of the previous year.

Mr. Vichai attributed this decline to the fact that interest rates had been raised five times from 1.25% to 2.5% in the third quarter. Among these indices, only the current situation index for employment and the launch of new projects or phases exceeded 50.0, while those concerning performance, employment, cost, and the launch of new projects or phases showed improvement compared to the second quarter.

Yours sincerely,
The editorial team at IBP Real Estate Co., Ltd.


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