Developers take a hit as LTV easing ends
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Developers take a hit as LTV easing ends

Most saw residential sales revenue decline

The expiration of the easing of loan-to-value (LTV) limits has had an impact on two-thirds of listed developers, resulting in residential sales revenue declining year-on-year in the first quarter of 2023.

Based on reports submitted to the Stock Exchange of Thailand, of the 30 developers engaged in residential development business, 20 experienced a year-on-year decline in revenue from residential sales in the first quarter.

The decrease was prevalent among developers of all sizes, including Areeya Property (-39%), Ananda Development (-13%), AP Thailand (-13%), Britannia (-12%), Charn Issara Development (46%), Chaopraya Mahanakorn (-15%) and Frasers Property Thailand (-11%).

Other affected developers were Lalin Property (-19%), Land & Houses (-30%), LPN Development (-28%), MK Real Estate (-24%), NC Housing (-0.24%), Nirvana Development (-56%), Origin Property (-29%) and Quality Houses (-17%).

Richy Place 2002 saw a decline of 36.7%, while Raimon Land reported no revenue from residential sales in the first quarter.

Singha Estate, Siamese Asset and Univentures also recorded decreases of 59%, 30% and 35%, respectively.

Only 10 developers achieved positive results, such as AssetWise with a 44% increase, Major Development (+2.6%), Noble Development (+11%), Property Perfect (+16%) and Pruksa Holding (+19%).

Other developers reporting growth included Sammakorn (+41%), SC Asset Corporation (+29%), Sena Development (+50%), Sansiri (+58%) and Supalai (+5%).

"Despite campaigns and promotions, homebuyers were clearly impacted by the expiration of the loan-to-value limits easing," said Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC).

"Since the easing of LTV limits has ended, obtaining home loan approvals has become much more challenging. Homebuyers who intended to have a second mortgage now need to acquire additional funds to cover the down payment."

Largely due to no more easing of LTV limits, REIC forecast the total number of residential transfers nationwide would decline by 10.2% to 352,761 units.

Even in a best-case scenario it would see a drop of 1.2% to 388,038 units, according to REIC.

"There are several risk factors to consider for the remainder of the year," Mr Vichai said. "Household debt remains high at nearly 90% of GDP, and we are experiencing an upward trend in interest rates with an increase of 0.75-1%. Additionally, the economic recovery may not be strong enough."

During the pandemic, the Bank of Thailand eased the LTV limits for mortgage lending to let homebuyers take out loans of up to 100%, with the aim of boosting the property sector and helping the economy recover from the impact of Covid-19.

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