Greater Bangkok market growth stalls on loan rules

Greater Bangkok market growth stalls on loan rules

The property market in Greater Bangkok is likely to grow by only 5% this year, much lower than the previous forecast of 10%, due to stricter mortgage rules, higher household debts and political problems, say industry groups.

People check out new projects at the 29th House & Condo Fair at the Queen Sirikit National Convention Center in Bangkok yesterday. The fair runs until Sunday. Developers believe buyers will return once they feel secure about their income. SOMCHAI POOMLARD

Atip Bijanonda, president of the Housing Business Association, said the overall property market value in Greater Bangkok this year will total about 300 billion baht, an increase of 5% from 2012.

Unexpected negative factors had an impact in the second half of the year, he said yesterday.

Higher household debts have made financial institutions more cautious about lending. The overall rejection rate this year has risen to 20% from 16-17% last year.

However, household debts are expected to ease next year as people adjust gradually to changing circumstances.

Mortgage rules will be not as strict as this year. The economy will continue growing but politics will remain a risk factor, so the property market will expand by about 5% next year, he said.

Some financial institutions have slowed down mortgage lending in the fourth quarter after reaching their target for home loans, but they will resume lending early next year, Mr Atip said.

The labour shortage will be a bigger problem next year as the limited number of construction workers will be in demand for the government's infrastructure megaprojects. The property sector is short of about 100,000 workers.

Construction costs will continue rising by about 5%, particularly for ready-mix concrete, as cement producers do not plan to expand machinery or production capacity.

Thamrong Panyasakulwong, president of the Thai Condominium Association, said a possible increase in interest rates next year will not worry homebuyers as much as their ability to get mortgage approval.

Interest rates used to be more than 10% but people still bought houses, he said yesterday at the 29th House & Condo Fair being held at Bangkok's Queen Sirikit National Convention Center.

As soon as people have an income, they are keen to have a housing unit, he said.

Pornnaris Chuanchaisit, president of the Thai Real Estate Association, said political problems might make housing sales at the fair miss the target of 3 billion baht.

The number of participants at the fair, which runs until Sunday, may not reach the target of 100,000.

A new promotion at the fair is an offer of a guaranteed rental yield of 5-9% for buying a condo unit. Most are located in Pattaya and some are near educational institutions.

A completed condo project in Pattaya offers a free eco-car worth 500,000 baht for any purchase of a unit priced from 3.68 million baht.

Other incentives at the fair include discounts of up to 500,000 baht, free furniture and recently launched items from Apple Inc such as the iPad Air, iPhone 5 and Macbook Air.

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