The three main real-estate-industry associations, namely the Thai Real Estate Association, the Housing Business Association and the Thai Condominium Association, have jointly organised the 24th semi-annual “House and Condo Expo” over the past weekend.
The biggest event of its kind, held at the Queen Sirikit National Convention Centre, drew a very enthusiastic crowd. This should provide some relief to the housing business in an atmosphere filled with many negative factors.
Prior to the expo, the first two months of this year saw a lacklustre housing market, with some developers in the Bangkok Metropolitan area reporting as much as a 30-per-cent decline in sales compared to the same period last year. The number of new housing projects launched during January-February this year plunged to about 14,000 units, from approximately 17,700 units in the same period last year. The drop came entirely from the high-rise sector, which witnessed only 5,700 units launched in the first two months, translating into a drastic 43-per-cent drop from 10,000 units launched in the corresponding period last year.
The Monetary Policy Committee last Wednesday hiked the benchmark interest rate by another 25 basis points, raising it to the 2.50-per-cent level. The upward interest rate trend is not going to reverse course anytime soon. Right after the committee’s announcement, large commercial banks swiftly led the way by increasing both deposit and lending rates, including mortgage rates. As a result, consumer-housing affordability is increasingly squeezed.
All is not doom and gloom for consumers, however, as it is very much a buyer’s market right now. At the said exposition, all kinds of promotional packages were offered by sellers, ranging from big discounts, free furniture, zero mortgages, give-aways, prize draws, etc. If a consumer needs to buy a house this year, now is the time. Do not procrastinate.
Psychologically, the general expectations of swiftly rising interest rates could push families to come out earlier to shop for a residence of their choice, to guard against paying a higher cost later if decisions are made too late. As the current upward interest rate swing could last well into next year, consumers are advised to lock in still-low fixed rates for at least a few years, before any chance of the rates coming down.
Developers are saying they would raise prices because of rising construction materials and labor costs, and I think this time around most of them are for real. Buyers who missed out at the expo for any reason are still in for a bargain in the next few months if they need a residence to live in. Nevertheless, I don’t support any buying for speculative purposes. (The Nation)