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PROPERTY
High materials costs, oil shock are to blame
KANANA KATHARANGSIPORN
The Government Housing Bank (GH Bank) downgraded their housing loan target for 2008 because of the economic slowdown and declining loans to the National Housing Authority (NHA), said president Khan Prachuabmoh.
Negative factors included higher oil prices that might reach $200 a barrel by the end of the year, higher inflation rates and living expenses, he said. At the same time, construction costs, which rose by 20% in the first half of the year, are likely to rise further.
Though the big five commercial banks targeted 160 billion baht worth of new housing loans this year, 25 billion more than in 2007, GH Bank expected to release only 94 billion baht in new housing loans this year, 1 billion baht lower than in 2007.
The revised target stemmed from ''overall economic slowdown and a 50% decrease in new loans released to Baan Ua-arthorn homebuyers from a target of 20 billion baht to only 10 billion'', said Mr Khan.
He said some Baan Ua-arthorn low-cost housing projects did not receive a good response from the market while other customers had a problem with the credit bureau, resulting in increased units that the National Housing Authority (NHA) needed to buy back.
Since the two state-run agencies co-operate, GH Bank has already released 13.28 billion baht of housing loans to 35,912 clients. However, the NHA has bought back 3,428 units worth 1.27 billion baht.
During the first half of the year, new housing loans released by GH Bank declined by 16-20% from the same period last year. In the first quarter, loans totalled 50 billion baht, dropping by 16% from the same period last year.
''This decline was in line with the economic slowdown where hesitation builds,'' said Mr Khan. ''In an unfavourable situation, if housing loans increase, there may be a problem in the future.''
As of the end of the first quarter, the bank's outstanding loans were 1.5 trillion baht, up from 1.48 trillion baht at the end of 2007.
He also suggested homebuyers consider smaller units at lower prices to assure their ability to pay installments as their purchasing power might be diminished by higher living expenses.
''It's a challenging year for the economy and the banking sector. The country cannot avoid oil price hikes and increasing inflation rates,'' he said.
He added rates would rise by 50-75 basis point in the second half as the Bank of Thailand already announced they would raise rates by 25 basis points.
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