The property market will benefit from political stability and the government’s policy of boosting demand in the first-home market in the second half of this year, according to property experts.
A survey of leading property firms by The Nation, seeking outlooks for the property market in the second half of 2011, found most believing that following the election, home-buyers will return to the market because of renewed confidence in political stability.
Property-market leader Pruksa Real Estate’s director and chief business officer Prasert Taedullayasatit said that the overall property market had fallen in the first half of this year. Demand for condominium units had shrunk by 34 per cent when compared with the fourth quarter of last year and by more than half when compared with the first quarter of 2010.
Although demand for low-rise residences, including townhouses and single detached houses, had increased by 25 per cent and 9 per cent respectively in the first half of this year, compared with the fourth quarter of last year, this demand alone was not sufficient to drive the overall market. More than half of the total value of the property market now comes from condominium projects, he said.
The value of the property market was Bt140 billion in the first half of this year, down from Bt275 billion in the first half of last year.
Prasert said he believed demand for residences would return to the market in the second half of this year, boosting the value of presales. Registration of new residences will end up 5 to 10 per cent higher this year than the number in 2010. However, revenue for property firms will depend on their portfolios of residences that are complete and ready to transfer to customers, he said.
Land & Houses’ senior executive vice president Naporn Soonthorn-chitcharoen said he believed the property market would continue to grow in the second six months of 2011, leading to annual growth of 5 to 10 per cent.
Naporn’s optimism is unaffected by the fact that registrations of new residences built by property developers in the first four months of 2011 fell by 42 per cent, from 27,109 units in the first four months of 2010 to just 15,714 units this year.
He said the second half of the year would see the completion of a number of new residential projects, including condominiums and low-rise construction of single detached houses and townhouses. Transfers from these projects to customers are expected to drive registrations of new residences up to more than 82,500 units before the end of this year – a rise of 5 to 10 per cent over last year, he said.
Naporn said the new government’s plan to increase the minimum daily wage to Bt300 would have only a minor impact on the property market because labour represented only about 20 per cent of total production costs in the industry. If the minimum daily wage rises from Bt215 to Bt300 [in Bangkok], this 39.5-per-cent hike in labour costs will translate into an increase in construction costs of about 4 per cent, he said.
Asian Property Development’s chief executive Anuphong Asavabhokhin agreed that the property market would be stronger in the second half of this year than it was in the first, thanks to political stability after the election. Home-buyers who delayed their decision to buy in June will return to the market.
“They will get the best financial conditions from commercial banks, because the banks face high competition from the government’s policy of offering a zero-per-cent interest rate for first-home buyers,” he said.
Moreover, homebuyers will get the best prices, because pricing will follow the costs of construction at the time the residences we built. This will be lower than for new residences launched next year, he said.
Condominium-market leader LPN Development’s managing director Opas Sripayak said that demand for condominium units priced below Bt3 million had continued to grow, although the number of sales in the first half of the year had fallen.
He believes that demand will return to the market in the second half of this year when the government introduces its policy of offering interest-free mortgage conditions for the first five years for first-home buyers purchasing residences valued at less than Bt4 million.
Source: The Nation