Government urged to allay concerns over rate hikes
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Government urged to allay concerns over rate hikes

As interest rates steady, the government should announce there will be no new rate hikes to bolster homebuyers' confidence amid an uneven economic recovery, says a property researcher.

Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC), said the continuous rate increases last year halted after the Federal Reserve maintained its key interest rate in December.

"Last year homebuyers were shocked by a string of five rate hikes between March and September. Now the interest rate shock has subsided," he said.

As the economic outlook this year remains unfavourable, Mr Vichai suggested the government take this opportunity to announce a temporary pause in rate hikes to boost homebuyers' sentiment.

"Economic growth is projected to be 3-4% in 2024, lifting people's income after the economy fell short of expectation last year," he said.

"However, government spending has been delayed since the fourth quarter of 2023 which will have an impact in 2024."

Mr Vichai said several economic boosters failed to meet their targets. The actual number of tourist arrivals was below the expected figure, while spending per head was limited as more tourists came from less affluent countries.

Chinese buyers in the condo market have refrained from purchasing properties overseas due to ongoing difficulties with money transfers.

The residential market in 2024 is expected to remain sluggish as the purchasing power of local buyers has yet to recover and foreign buyers have not fully returned, said Mr Vichai.

"Given the stronger local purchasing power, government stimulus measures could significantly impact the decisions of homebuyers," he suggested. "Also, easing loan-to-value limits can help boost home purchase and absorb the housing stock."

As of the end of the third quarter of 2023, the number of unsold residential units in Greater Bangkok totalled 194,589, amounting to 1.08 trillion baht. This marked an increase of 9.6% and 24.1%, respectively, from the corresponding period in 2022.

The most significant increase was observed in condos, rising by 16.9% to 74,108 units valued at 350 billion baht, growing 27.6%.

Low-rise houses saw a 5.5% increase in unit numbers and a 22.5% increase in value.

The number of newly sold residential units in the first nine months of 2023 amounted to 55,627 units, valued at roughly 289 billion baht, marking a decrease of 24.7% and 21%, respectively, compared to the same period in 2022.

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