Q1 home transfers surge on LTV limits
New home transfers in the first quarter this year are expected to surge 66% to 200 billion baht as homebuyers rush to secure mortgages before the new lending curbs take effect on April 1, 2019.
Atip Bijanonda, president of the Housing Business Association, said the central bank's stringent loan-to-value (LTV) ratio rule is driving housing transfers in the first three months, boosting new home loans in the period higher than usual.
"The new mortgage rule is expected to draw some housing units that were scheduled to transfer in April or May to transfer in the first quarter instead," he said.
Usually new home transfers in the first quarter amount to 40 billion baht per month. This year the figure is expected to be 200 billion baht as an additional 80 billion will come from transfers that were scheduled in April and May.
Mr Atip said a number of mortgage contracts signed before April 1, 2019, will be transferred after that day as the new lending limits deal with the date of the mortgage signing.
"Homebuyers will have April and May to receive a house transfer if they sign a mortgage before April 1," he said. "Banks are taking a risk if those borrowers are unemployed or create other debts after they receive a home loan."
Mr Atip said the single house and townhouse (low-rise) market in Greater Bangkok this year will be steady and has a chance to grow as demand in the sector is real. In 2019, the low-rise market share nationwide is expected to outperform condos for the first time.
He said demand in low-rise house nationwide this year will total more than 120,000 units, a growth of 5%, comprising 50,000 units in Greater Bangkok and 70,000 units in provinces.
Condo demand will drop slightly to 95,000 units, with 60,000 units in Greater Bangkok and less than 35,000 units in the provinces, said Mr Atip.
"The market in the first half will slow, dragged by the new LTV limits and the general election," he said. "If the next government continues existing policies confidence will surge."
Pornarit Chounchaisit, president of the Thai Real Estate Association, said the economic outlook in the first half is uncertain.
"If there is no political chaos and a new government can be established, the economy will soar in the second half, creating positive momentum in the property market."
The two associations and the Thai Condominium Association will hold a house and condo fair during March 21-24 at Queen Sirikit National Convention Center, where more than 150 developers will introduce over 1,000 projects. Sales are expected to total 6 billion baht.