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| • EXCH RATES |
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Baht/$ 33.64/67
Bid/Ask
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GOLD |
14,900
+ 200
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REAL ESTATE
KANANA KATHARANGSIPORN
As banks have reduced homebuyers' purchasing ability by 10% and the economy continues to slow down in the second half, the second-hand property brokerage Realty World Alliance Co has reduced it sales target by 15% in 2008, according to managing director Visit Kunathornkul. He said political and economic factors now had more influence on homebuyers' decision-making. People's purchasing power decreased as their expenses soared from higher inflation rates and oil prices.
''Banks are underestimating homebuyers' capabilities as they are afraid customers might not be able to pay monthly installments with higher living expenses,'' he said. ''Though monthly incomes and payment ability stayed the same, living expenses have skyrocketed due to higher prices of oil and food.''
In the past four months, the company found financial institutions applied stricter conditions when they considered releasing loans, reducing customers' ability to pay monthly installments by 10%.
For example, someone earning 30,000 baht a month would normally be able to apply for a housing loan for a unit priced up to two million baht. Now many large banks have grown more cautious, and would approve no more than 1.8 million baht for that customer, said Mr Visit.
The economic slowdown and stricter rules for housing loans caused Realty World to miss its sales target by more than 10% in the first half. It had turnover of about 800 million baht with an average unit price of three million baht.
Despite the property tax incentives that took effect in March, the company needed to cut its sales target for 2008 to 1.7 billion baht, 15% lower than an earlier target of two billion baht.
''The second-hand home market in the second half will be worse than in the first half as the political situation is more uncertain,'' he said. ''Pressure from the politics is greater than any attraction from the incentives.''
The company has also reduced its advertising budget by 40% but will double spending on housing fairs and events. It is participating in the NPA Grand Sale being held until tomorrow and is conservatively expecting sales of 50 million baht in the fair.
''Events give us more chances to meet, communicate and negotiate with customers. In this [struggling] time, we have to spend more wisely,'' Mr Visit said.
He said interest rates should rise in the second half of the year to slow inflation, and expected an increase of at least 25 basis points to have a greater impact on low-income earners.
''Earners making below 20,000 baht a month are now struggling to survive with rising living expenses. They might face difficulties in paying housing loans if interest rises. For a one million baht unit, a 0.25-point increase would add another 500 baht a month in interest.''
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