by wilbersuen | Oct 29, 2024 | News
The Bangkok housing market is projected to decline amid economic challenges, according to SCB EIC, the research arm of Siam Commercial Bank. They anticipate a 10% drop in the transfer of new residential units in Greater Bangkok this year, with an additional contraction of 1-3% likely in 2025, largely due to Thailand’s stagnant economic conditions.
In terms of market value, a 9% decrease is forecast for 2024, with potential stabilization between 0-2% expected next year.
The slowdown in the housing sector stems from rising living costs, reduced purchasing power, high household debt, increased interest rates, and more stringent mortgage approval processes. These pressures are prompting prospective homebuyers, especially within lower- and middle-income brackets, to delay their purchasing plans.
SCB EIC also forecasts a 28% year-on-year reduction in newly launched residential units for 2024, with moderate recovery expected in 2025 as the contraction may ease to 2-4%.
To address these conditions, developers are concentrating on middle- to high-end projects where buying capacity is less affected. Major local banks reported a decline in mortgage lending in the first nine months of this year due to tighter mortgage criteria.
SCB, the fourth-largest bank in Thailand and a leader in housing loans, reported a mortgage loan portfolio of 779 billion baht as of September 2024, reflecting a quarter-on-quarter decrease of 15.5%, a year-to-date decline of 39%, and a year-on-year drop of 38.5%.
Bangkok Bank (BBL), the country’s largest lender, recorded a mortgage portfolio of 332 billion baht, slightly down by 0.6% quarter-on-quarter and 1.7% year-to-date. Bank of Ayudhya (Krungsri) saw its housing loan portfolio decrease to 248 billion baht, down by 3% quarter-on-quarter and 7.6% year-to-date.
TMBThanachart Bank (ttb) reported an overall mortgage lending decrease of 0.8% quarter-on-quarter and 2.2% year-to-date as of September, according to a filing with the Stock Exchange of Thailand (SET).
In contrast, Krungthai Bank (KTB), Thailand’s second-largest lender, reported growth in its mortgage loan portfolio, reaching 498 billion baht by September, a 1.5% increase quarter-on-quarter and a 2.9% rise year-to-date.
Kasikornbank (KBank) did not release mortgage loan data in its SET report.
In response to current market trends, major banks announced widespread cuts to their lending rates, including adjustments to the minimum retail rate (MRR) for housing loans. BBL now offers the lowest MRR at 7% per year. Other banks’ rate reductions will be effective from Nov 1, with the revised MRRs as follows: KTB at 7.445%, KBank at 7.180%, SCB at 7.175%, Krungsri at 7.275%, and ttb at 7.705%.
Source: Bangkok Post
Yours sincerely,
The editorial team at Invest Bangkok Property
by wilbersuen | Oct 21, 2024 | News
The developer sentiment index for Greater Bangkok’s housing market fell for the second consecutive quarter in Q3, hitting its lowest level since Q3 2020.
Kamonpop Veerapala, president of Government Housing Bank and acting director-general of the Real Estate Information Center (REIC), reported the current situation index at 45.1, a 4.6-point drop year-on-year and 0.1 points lower than in Q2.
“The index has remained below the neutral threshold of 50 for seven consecutive quarters, signaling a continued decline in developer confidence in the residential sector,” he said.
The last time the index was this low was in Q3 2020, at 42.8 points, before rising to 46.3 in Q4 2020.
In Q3 2024, the most significant quarter-on-quarter decline was seen in sales sentiment, which dropped 6.6 points to 40.7, followed by a 0.2-point dip in investment sentiment, bringing it to 47.4.
Notably, revenue sentiment rose by 2.5 points to 42.0, and sentiment for new project launches increased by 1.6 points to 50.7.
Development costs sentiment increased 1.5 points to 40.4, while employment sentiment rose by 0.9 points to 49.6. However, except for new project launches, all other components remained below the neutral 50 mark.
The sentiment index for listed developers declined to 47.9, down from 52.2 in Q2 2024, reflecting reduced confidence and heightened concerns among listed firms, according to REIC.
Sales sentiment for listed developers saw the largest drop, falling 15.8 points to 43.8. Investment and new project launch sentiment both declined by 5.6 points to 52.1, while revenue sentiment decreased by 2.3 points to 47.7.
On the positive side, development costs sentiment rose by 3.1 points to 39.6, and employment sentiment edged up by 0.2 points to 52.1.
Looking ahead, the expectations index for the next six months rose to 51.6, slightly up from 51.4 in Q2 2024, signaling a positive outlook from developers for the near future.
The biggest improvement was seen in sales sentiment, which increased by 3.4 points to 57.8, followed by development costs, which rose by 2.9 points to 37.5.
Employment sentiment increased by 2.2 points to 52.4, and revenue sentiment grew by 2.0 points to 53.0.
However, there were declines in sentiment for new launches, which dropped by 6.3 points to 58.1, and investment, which decreased by 3.1 points to 51.0.
Source: Bangkok Post
Yours sincerely,
The editorial team at Invest Bangkok Property
by wilbersuen | Oct 17, 2024 | News
The Thai government is preparing to roll out 55 billion baht (approximately US$1.66 billion) in soft loans to stimulate the property sector and boost the national economy, according to Deputy Finance Minister Paopoom Rojanasakul.
This proposal will be presented to the cabinet for approval, Rojanasakul stated in a press briefing.
He added that the stimulus package would target both supply and demand within the real estate market, aiming to encourage both property developers and buyers, ensuring a wide-reaching impact.
The Deputy Minister emphasized that fresh stimulus measures are necessary as the current schemes have been fully utilised.
Recently, the Finance Ministry leveraged state financial institutions, including the Government Housing Bank (GH Bank), to support the real estate market. Earlier this year, GH Bank launched a low-interest loan program called “Happy Home,” offering a total of 20 billion baht in loans. This initiative provided flexible loan terms for low-income households, allowing for a maximum loan of 3 million baht per applicant, with a fixed interest rate of 3% for the first five years. However, this program has now reached its funding limit.
Source: Bangkok Post
Yours sincerely,
The editorial team at Invest Bangkok Property
by wilbersuen | Oct 16, 2024 | News
Vimarn Suriya Co, the developer behind the luxury mixed-use Dusit Central Park project, remains unfazed by rising interest rates and a strengthening baht, as the branded residential development primarily targets affluent Thai buyers.
CEO La-ead Kovavisaruch noted that elevated mortgage rates have a minimal effect on luxury homebuyers compared to those in the mass market.
“Demand in the luxury segment remains robust, while supply, particularly in prime locations, is quite limited,” she commented.
Currently, 80% of The Residences at Dusit Central Park, valued at 11.5 billion baht, have been sold. The company anticipates reaching 85% by year-end.
The project comprises 406 units, starting at 55 square meters, with an average price of 380,000-390,000 baht per square meter.
There will be seven penthouses, including six units of 450 square meters and one expansive 900-square-meter unit. Two 450-square-meter penthouses and the 900-square-meter unit are still available.
“The 900-square-meter penthouse offers customization options, allowing buyers to tailor the number of bedrooms,” said Ms. La-ead.
“We are in the process of selecting a luxury brand to collaborate on marketing this unit.”
She added that the recent strength of the baht would not affect sales, as 80% of buyers are Thai nationals.
“The baht has fluctuated between 32 and 37 baht to the US dollar over the last two to three years, so the current rate hasn’t impacted our project,” said Ms. La-ead.
“Our key customer base is Thai, which means currency fluctuations affect us less compared to foreign buyers.”
The company expects the project to be fully sold by 2025, with construction scheduled for completion by the end of that year.
Source: Bangkok Post
Yours sincerely,
The editorial team at Invest Bangkok Property
by wilbersuen | Oct 9, 2024 | News
Rising house prices, driven by increasing construction costs, are having a lesser impact on potential homebuyers than the growing challenges in obtaining mortgage loans, according to property associations.
Pornarit Chounchaisit, President of the Thai Real Estate Association, noted that the surge in costs reflects a global trend, with property prices climbing in major cities worldwide.
“The war and its influence on oil prices are escalating construction costs for new housing projects,” he said. “Moreover, rising labor costs will further drive up housing prices.”
Although selling homes remains difficult, housing prices are expected to increase next year due to the government’s planned wage hikes. However, this policy is likely to benefit foreign workers, who constitute 50-60% of the labor force, more than local labor.
Soonthorn Sathaporn, President of the Housing Business Association, emphasized that the increase in housing prices has not outstripped inflation.
“The real challenge lies in stricter lending criteria, which are preventing many potential buyers from securing mortgages,” he said.
He also pointed out that mortgage rejection rates have surged to 35%, up from the usual 15-20%, with rejection rates reaching 50-60% for homes priced between 2-3 million baht.
Some developers have had to reduce their profit margins to make homes more affordable and are expediting construction to control costs.
To boost demand, Soonthorn urged the government to extend the expiring property measures and introduce income tax deductions for first-time homebuyers. He also suggested that relaxing loan-to-value (LTV) regulations could stimulate second-home purchases, particularly for properties near schools and workplaces.
Prasert Taedullayasatit, President of the Thai Condominium Association, supported the call for temporary relaxation of LTV rules to encourage market growth, proposing that the government withdraw these measures if speculative behavior is observed.
“A reduction in interest rates would also enhance purchasing power, especially for lower-income buyers, while a weaker baht could boost tourism and attract foreign property buyers,” he added.
To further stimulate demand in Q4, the three associations are organizing the House & Condo Expo from October 31 to November 3 at the Queen Sirikit National Convention Center. Their goal is to sell at least 1,000 units, totaling over 4.5 billion baht in value, and they expect an additional 10 billion baht in sales in the months following the event.
Source: Bangkok Post
Yours sincerely,
The editorial team at Invest Bangkok Property
by wilbersuen | Oct 8, 2024 | News
Thailand is poised to transition to a cashless society faster than its regional counterparts, driven by the nation’s rapid adoption of digital technologies, according to a survey by Visa.
Visa, a leading global provider of digital payment services, recently conducted the Consumer Payment Attitude Study, which indicates that Thailand could become cashless by 2028, ahead of the broader ASEAN region, which is expected to reach this milestone after 2028.
The survey found that 22% of Thai consumers believe a cashless society will emerge between 2026 and 2028, compared to 16% of consumers across ASEAN.
Thailand ranks third in the region for carrying minimal cash, with cash accounting for only 47% of the content in each respondent’s wallet, trailing behind Vietnam (56%) and Malaysia (49%).
Punnamas Vichitkulwongsa, Visa Thailand’s country manager, noted that the development stage of payment technology in each regional market is critical for advancing towards a cashless society. In Thailand, PromptPay, the national payment platform, has significantly driven digital banking adoption, especially during the post-pandemic period.
The survey also revealed that Thailand leads the region in mobile banking app usage, with an impressive 97% of Thai consumers using these apps at least once a week, surpassing Vietnam (95%) and Indonesia (90%).
Real-time payments (RTP) are growing rapidly, with 76% of ASEAN consumers aware of RTP and 47% having used it for fund transfers. Thailand leads the region in RTP usage frequency, with 86% of respondents making at least one RTP transaction per week, followed by Vietnam (84%) and Indonesia (69%).
Mr. Punnamas attributed the growth of RTP in Thailand to PromptPay, which has enhanced digital payment adoption and supported Visa’s business in the market. Thai consumers are becoming increasingly comfortable with digital payments, including Visa credit cards.
However, he acknowledged that PromptPay’s success has affected Visa’s business in Thailand, particularly in the debit card segment. The cancellation rate of Visa debit cards has increased post-pandemic, largely due to the rising influence of PromptPay.
“Approximately 20% of Visa debit cardholders have not renewed their cards after expiry during the post-pandemic period. However, this figure is expected to decline as debit cards remain essential for specific customer segments,” he said.
Given the country’s high household debt and limited access to credit cards for certain retail borrowers, debit cards remain a crucial digital payment option for this segment.
Mr. Punnamas further shared that Visa Thailand plans to launch Click-to-Pay, a tokenized payment system, next year to enhance card security and reduce fraud. This innovative solution will eliminate the need for a 16-digit card number.
Source: Bangkok Post
Yours sincerely,
The editorial team at Invest Bangkok Property
