Housing market set to post 15% decline

Housing market set to post 15% decline

Slip in line with GDP downgrade

The pandemic is likely to cause the residential market nationwide to fall by 15% this year, in line with a forecast 5.5% contraction of GDP growth and a sharp drop in housing absorption rate, according to the Real Estate Information Center (REIC).

Vichai Viratkapan, REIC acting director-general, said the centre downgraded housing market growth this year from an expansion of 3-5% forecast in the last week of February.

"The market in the second quarter will nosedive, but we predict a slight recovery in the fourth quarter, still lower than the five-year average," he said.

The number of residential transfers nationwide will decrease year-on-year 17% to 311,719 units, the lowest since 2015, which was the first year the data was collected, said Mr Vichai. The five-year average is 344,750 units.

In the first quarter of 2020, the number of residential transfers nationwide, including new and second-hand units, totalled 89,024 units worth 210 billion baht, up 2.5% and 6.4% respectively.

Residential units transferred to foreigners in the first quarter totalled 2,647 units worth 10.6 billion baht, down 24% and 20% respectively. Last year it was 12,609 units, down from 13,033 units in 2018.

Chinese were transferred 1,446 units in the first quarter worth 5.95 billion baht. Last year they totalled 7,506 units worth 28.9 billion baht, down from 7,551 units worth 29.4 billion in 2018.

According to REIC, under a base case scenario, all figures across the board related to the residential sector will drop this year to the lowest since the data was collected.

In Greater Bangkok, residential transfers will shrink 19% to 160,350 units, compared with a five-year average of 181,757 units.

Condo transfers in the capital will drop from 98,679 units last year to 75,777 units, the lowest since 2015, said REIC.

In the provinces, the number of residential transfers will decline by 14% year-on-year to 151,369 units, lower than the five-year average of 162,993 units.

New mortgages, which include refinancing, will decrease by 11% to 571 billion baht from 640 billion in 2019.

The peak for mortgages was 703 billion baht in 2018. The amount this year will be the lowest since 2013, said REIC.

The number of residential construction permits nationwide will decline by 17% to 251,601 units, the lowest since 2008, which was the first year the data was collected. The five-year average was 317,375 units.

"Construction permits showed the lower confidence among developers who were concerned about the sluggish market since last year, when the new lending curbs came into effect," said Mr Vichai.

As the number of residential construction permits in Greater Bangkok has dropped since 2018, new residential supply being launched in 2020 will continue to plunge to 79,408 units from 99,118 units in 2019 and 145,972 units in 2018, a year-on-year drop of 20% and 32% respectively.

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