Experts see residential recovery next year
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Experts see residential recovery next year

Market faced a raft of challenges in 2023

The residential market won't recover until 2024 due to mortgage loan approval issues, particularly in the mass market which has been affected by higher interest rates, according to property experts.

Surachet Kongcheep, managing director of property consultant Property DNA, said the market this year has been challenged by the issue of mortgage loan applications, despite developers' efforts to assist homebuyers in every possible way.

"Although discounts were provided, some homebuyers still faced rejections when it came to their home loan applications due to the stricter criteria of financial institutions," he said. "The rejection rate was as high as 40-50%. And in some projects, it may have exceeded 50%."

Moreover, some buyers secured home loans from banks at an amount below the property's actual value. Therefore, reducing new project launches was one solution for developers in this scenario, which resulted in a decrease in income from fewer launches.

According to Property DNA, the total revenue of 39 listed residential developers in the first nine months rose by 1.37%, but their combined net profit dropped by 6.37%, mainly due to a slowdown in purchasing power in the third quarter of 2023.

The developers' combined net profit decreased by 20%, along with a 2.9% drop in their total revenue in this year's third quarter.

"The revenue didn't decline significantly, but the profit saw a significant drop, likely due to developers focusing on revenue from completed project transfers in the third quarter," said Mr Surachet.

They also offered attractive pricing promotions, willingly compromising their profits and continued these activities into the fourth quarter of the year, he added.

Of the 39 listed developers, only four companies recorded more than 20 billion baht in revenue in the first nine months of 2023 -- Sansiri, AP Thailand, Supalai and Land & Houses.

Sansiri recorded the largest net profit in the first nine months, while AP Thailand posted the largest revenue.

Sansiri was expected to make the largest net profit in the sector this year as it had many projects to be transferred and newly launched in the fourth quarter, said Mr Surachet.

Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC), said this year's market would experience a decline in both supply and demand as 2022 set a high benchmark in terms of a robust recovery.

In 2024, REIC predicts a 4% growth in the number of unit transfers and a 4.6% growth in the value of transfers, projecting the figures will reach 392,936 units valued at 1.1 trillion baht.

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