Pathum Thani house sales dry up as drought bites

Pathum Thani house sales dry up as drought bites

A boat shop selling noodles in Rangsit area of Pathum Thani still opens as usual though the water in Khlong Rangsit has dried up. (Photo by Pattanapong Hirunard)
A boat shop selling noodles in Rangsit area of Pathum Thani still opens as usual though the water in Khlong Rangsit has dried up. (Photo by Pattanapong Hirunard)

Residential sales in drought-stricken Pathum Thani may face a slowdown in the second half of the year as people are worried about a water shortage. This has exacerbated the province's high mortgage loan rejection rate, warns a developer.

Pawarun Udomsiri, executive vice-president of Golden Land Residence Co, a subsidiary of SET-listed Golden Land Property Development Plc, said Pathum Thani was likely to be the first zone where housing sales would be weakened by insufficient water supply.

"Seasonally, housing market sentiment in the third quarter will slow down due to the rainy season. But this year there is another problem — the drought," he said. "Prospective homebuyers looking for a unit in Pathum Thani may delay decision-making as they are uneasy about the water supply."

Pathum Thani's housing loan rejection rate ranks the highest at over 40% because it has the highest number of non-performing loans, according to commercial bank data, said Mr Pawarun.

The most popular residential zones bordering northern Bangkok include Rangsit, a subdistrict of Thanyaburi, and Lam Luk Ka. Housing demand mainly stems from salaried workers living in the area.

The largest market segment is townhouses priced 2-3 million baht a unit. Competition is stiff as there are a large number of small and medium-sized non-listed developers.

"As Bangkok's neighbours, Pathum Thani and Nonthaburi were in a similar position, popular among Bangkok's middle and lower-income earners, but now Nonthaburi is preferable because of the arrival of the Purple Line," said Mr Pawarun.

Amid the sluggish economy, single houses priced 10 million baht and above face slower demand than other segments as buyers consider market sentiment when purchasing a new unit, he said.

"Upper-end buyers usually get updates faster than lower-end buyers. They also buy a new unit when they want since they already have a house," said Mr Pawarun. "Demand in this segment has slowed since late last year."

He said the mortgage loan rejection rate in the upper-end segment rose from less than 10% last year to 15% this year as customers who used to pay in cash shifted to borrowing.

The segment with the highest mortgage rejection rate for the company was townhouses priced 2-4 million baht, standing at 35%, up from 20-25% last year.

During the first half of the year, the company posted 5.4 billion baht in presales from single houses and townhouses, up from 3.2 billion last year. It targets 10.6 billion baht by the end of the year, rising from 7 billion in 2014.

Of first-half total presales, 3.6 billion baht came from townhouses. It expects to have 4.5 billion baht in townhouse presales and 3 billion baht in townhouse revenue by the year-end.

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