The average price of condominiums could grow at least 8% in 2018, despite the looming land and buildings tax, says property consultant Nexus Property Marketing Co.
Managing director Nalinrat Chareonsuphong said the land and buildings tax, due to come into force in January 2019, is unlikely to harness the increase in land prices in Bangkok, allowing condo prices to keep rising.
“There is unlikely to be forced sales among landowners who are pressured by the land and buildings tax,” she said.
“If the tax is effective, they have options to apply to their assets anyway and will not need to sell the plots.”
As land prices will keep rising, condo prices will also rise next year. This year the average selling prices of new condos in Bangkok rose by 8% to 130,600 baht per square metre from 121,000 baht per sq m last year.
The average increase of condo prices in the past five years was 9% per year.
Pathumwan and Ratchathewi districts saw the highest increase in condo prices, with a rise of 16% to 234,000 baht per sq m on strong demand.
Land costs in these locations were also higher while new condos were limited in supply over the past several years.
For inner-city locations, the average selling price rose by 12% to 210,700 baht per sq m. In Yannawa and Klong San districts, where condo sales were healthy, the average selling price also increased by 12%. In Bangkok outskirts, the increase in price was slight at around 5%.
According to Nexus’ market research, the number of new condos launched in Bangkok this year hit the highest in a decade with a total of 62,700 units from 128 projects.
The new condo supply launched this year was 15% higher than the five-year average, which was some 53,600 units per year.
The total condo supply in the market was 550,000 units.
The highest increases in condo supply were seen in Phra Khanong-Suan Luang area with 14,400 units or a rise of 23%; Phaya Thai-Ratchadaphisek with 13,200 units, an increase of 21%; and Thon Buri-Phetkasem with 8,900 units, or growth of 14%.
The new supply in these three locations accounted for 58% of the total of new condos launched in Bangkok.
The Phra Khanong-Suan Luang area also saw the largest number of new projects launched, while the Pathumwan-Ratchathewi area saw the highest increase in prices with a rise of 16%.
In 2017, new demand for condo sales in the market totalled 57,300 units, which was 14% higher than the average sales over the past five years, or some 50,400 units per year.
The total condo sales rate in the market stood at 90%, while the total sales of condos in the market rose to 496,100 units.
The number of unsold condos in the market is around 53,900 units.
In 2017, the average sales rate of new condos launched in the market was roughly 62%.
Phra Khanong-Suan Luang, Phaya Thai-Ratchadaphisek and Pathumwan-Ratchathewi saw the highest numbers of condos sold.
The Pathumwan-Ratchathewi area saw the highest new condo sales rate at 88%.
In the past five years, the condo market expanded to outer city locations. The zone where condo area growth was the highest was Thon Buri-Phetkasem with a rise of 107%, followed by Tiwanon-Rattanathibet (76%) and Chaeng Watthana-Pak Kret (68%), when compared with 2016.
Ms Nalinrat said the property market next year will see growth of over 10% in the amount of new supply.
“Next year the property market will be in transition, driven by various factors including foreign investment, exponential growth in Cambodia, Laos, Myanmar and Vietnam, the ageing population and technology for new property developments,” she said.