Increasing property and real estate prices and a large supply pipeline could be masking the start of a slowdown.
These are the views of the respected Economist Intelligence Unit, in a balanced report citing numerous research and data from real estate firms, developers and financial organisations.
Both land and real estate prices have been rising steadily and quickly over the past ten years and more, but not as quickly as those in neighbouring Malaysia and nearby Singapore,
A Thai government survey recently showed the price of land outside Bangkok had grown more than 30 percent in the period from 2011 until now. Within Bangkok, land prices have risen by an average of 15 percent during the same period although some areas have seen rises of as much as 70 oercent on the back of mass-transit developments.
That said, property developers have begun to feel the pinch of lower GDP growth, tighter bank lending and the uncertain economic outlook. Some reviewed their yearly forecasts downward following the Bangkok bomb on August 17, but arguable just as many have revised their predictions in the opposite direction.
Some developers have called on the government to scrap property-related fees including the 2 percent property transfer fee and a 1 percent mortgage fee, but will this be enough to drive increased demand?
Thailand’s largest mortgage lender, Siam Commercial Bank, expects annual mortgage and retail lending to grow by 6 percent this year however the Central Bank’s property indicators suggest a slowdown in the market is already happening.
The number of land and building transactions fell by 10.9 percent year-on-year between January and May 2015, while during the same period the number of developer land licenses fell by 30.7 percent year-on-year.
The property market in Bangkok’s suburbs seemed to have fared better with the average number of new housing units coming to market down by less than 1 percent year-on-year during the first five months.
That’s exactly the area that many experts and market watchers are most worried about, and where suggestions of oversupply and bubble are most often uttered, so perhaps those particular worries may already being self-regulated by the very developers for whom any potential oversupply will hurt the most.
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