Despite recently approved property stimulus incentives, the housing market in major northeastern provinces is expected to stay sluggish next year because of the loan-to-value (LTV) limits and the global economic slowdown.
Narathorn Taninpitak, president of the Nakhon Ratchasima Real Estate Association, said the ongoing trade war and the world's slowing economy are having a negative impact on the export-oriented industrial sector, while agricultural products and small businesses remain weak.
"This will affect housing demand in the Northeast," he said. The new lending curbs will continue to dampen demand in the provinces next year as homebuyers face more difficulties purchasing a unit at a price they prefer, said Mr Narathorn.
The LTV limits have affected several target homebuyer groups, he said.
Generation X, or those aged 38-54, who prefer buying a second house find it difficult to get a mortgage for a second unit, he said.
Most millennials, or people aged 24-37, have a debt problem, said Mr Narathorn. They are rarely able to borrow to buy a house. Generation Z, or those aged 10-23, have low purchasing power and no savings to make a down payment.
"The government should rethink the LTV regulations by considering more details," he said. "It should classify buyers by their risks."
Mr Narathorn suggested the government classify residential units by categories such as houses and condos in urban areas and villas and condos in resort areas, and have different considerations for the zones.
"Locations should be considered as well, separated into Bangkok, the provinces, industrial towns and tourist destinations," he said.
In the first half of 2019, the absorption rate for most housing categories and price ranges in Nakhon Ratchasima decreased from the latter half of 2018. This trend should continue in the second half of 2019, said Mr Narathorn.
In the first quarter of 2019, housing transfers in the province dropped by 43% to 851 units from 1,494 in the same period last year. The first-quarter tally was the lowest in three years, down from 888 units and 1,064 in the fourth and third quarters last year.
"Property incentives should be extended to units priced up to 5 million baht as 3 million is not enough to boost the market and the economy," he said.
Paijit Manasilp, managing director of Nakhon Ratchasima housing developer Klang Casa Co, said the province's market next year will slow down as the lending rules may be stricter.
"A new motorway from Bang Pa-in in Ayutthaya to Nakhon Ratchasima could help boost the market in 2021 as construction is scheduled to finish by the end of next year," he said.
As property incentives including a cut of transfer and mortgage fees to 0.01% from 2% and 1%, respectively, may help encourage some homebuyers next year, Klang Casa plans to speed up the development of two low-rise condo towers with a total of 150 units for completion by 2020.
"Construction of the eight-storey condo towers can be completed within 12 months and we plan to launch them in mid-2020 to benefit from the property incentives," said Mr Paijit.
Unlike provinces such as Khon Kaen, Udon Thani and Ubon Ratchathani, where the majority of demand is for single houses or townhouses, condo buyers in Nakhon Ratchasima are mostly those working for industrial estates.
Vichai Viratkapan, acting director-general of the Real Estate Information Center, said Nakhon Ratchasima and Khon Kaen were only two provinces where new condo supply was launched in the first half.
No new condo supply was launched in Udon Thani and Ubon Ratchathani over the past few years.