LTV easing to accelerate housing market recovery
Sales expected to reach pre-Covid levels in 2023
The Real Estate Information Center (REIC) revised up its housing market predictions for next year, with a recovery to pre-Covid levels now expected in 2023.
REIC's acting director-general Vichai Viratkapan said the relaxation of the loan-to-value (LTV) ratio was a key booster to the residential market from the fourth quarter of this year onwards.
"We revised up a prediction on new supply being launched in Greater Bangkok in the fourth quarter from merely 4,000 units before the LTV relaxation to 20,000 units," he said. "LTV has a great impact on market sentiment."
However, the fourth-quarter numbers will remain below a five-year quarterly average of 24,000 units.
By year-end, new residential supply launched in Greater Bangkok will have decreased by 35%, compared with a drop of 32% in 2020, and a 19% fall in 2019 after lending curbs took effect on April 1, 2019.
REIC also revised up new sales of residential units nationwide from a decline of 8% to a drop of only 0.5% by the end of 2021, or from 97,103 units to 105,045 units.
The sales value was revised up from 405.68 billion baht, a dip of 10%, to 438.15 billion baht, a 2.8% decrease.
Next year, new sales nationwide are expected to see a growth of 21.4% to 127,552 units, with an increase in value of 18.6% to 519.7 billion baht, up from earlier forecast increases of 19.5% and 16.5%, respectively.
"Our predictions did not include foreign demand as many economic analysts expected the number of foreign tourists and foreigners to remain low in 2022-23. The proportion of foreign buyers in the Thai housing market was also only 10%, which was not significant," said Mr Vichai.
A market recovery of newly registered residential units and transferred units to pre-pandemic levels would take place in 2023, faster than an earlier forecast in 2027, driven by LTV relaxation and the country's reopening.
Meanwhile, new sales nationwide would climb back to pre-pandemic levels in 2023, or two years earlier than previous predictions, before the LTV relaxation was announced.
The 2023 market would match a five-year average, Mr Vichai added.
The factors REIC used to predict the residential market were: GDP growth; the average minimum retail rate of six banks; policies and situations; the inflation rate; and the absorption rate of low-rise houses and condos in Greater Bangkok and the provinces.