Lending curbs set to hit residential sales
Developers are likely to slow provincial launches, writes Kanana Katharangsiporn
The Bank of Thailand’s macroprudential policy will hurt future residential sales in 20 first- and second-tier provinces, with Chon Buri continuing to see the largest number of unsold units, which last year represented more than one-third of the total. Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC), said the new lending curbs will have a significant impact on home purchasing power in the second half of the year after they take effect on April 1. “Many developers may slow new supply launches over concerns about the market impact of the new lending rules,” Mr Vichai said. “The monthly absorption rate will drop in the second half from the first half in all provinces and all housing categories.” The REIC each year surveys the residential market in Greater Bangkok (which includes the capital, Nonthaburi, Samut Prakan, Samut Sakhon and Nakhon Pathom), as well as in 20 provinces in four regions nationwide. The central region comprises Ayutthaya and Saraburi, while the western region includes Phetchaburi and Prachuap Khiri Khan. The southern region comprises Phuket, Songkhla, Surat Thani and Nakhon Si Thammarat. The eastern region is made up of Chon Buri, Rayong and Chachoengsao, while the northeastern region is Nakhon Ratchasima, Khon Kaen, Ubon Ratchathani, Udon Thani and Maha Sarakham. The northern region contains Chiang Mai, Chiang Rai, Tak and Phitsanulok. The three provinces in which the REIC anticipates the lowest monthly absorption rate in the second half are Tak (1.4%), Chiang Rai (1.5%) and Chachoengsao (1.8%). Developers should be particularly wary of new supply launches in Chachoengsao, particularly low-rise units, as the monthly absorption rate plunged to just 1% in mid2018 from 4-5% in 2017, Mr Vichai said. Chachoengsao will see a rise in unsold supply by the end of 2019 compared with Tak and Chiang Rai, according to the REIC. The centre estimates there will be 6,090 unsold units in Chachoengsao, comprising 5,706 low-rise units and 384 condo units, versus 490 and 1,530 unsold units in Tak and Chiang Rai, respectively. The unsold supply will comprise 1,459 lowrise and 71 condo units in Chiang Rai and 222 low-rise and 268 condo units in Tak. “Our prediction does not aim to shock the market, but to show what the future situation will be so that developers will be more cautious,” Mr Vichai said. “Amid a market or economic slowdown, it does not mean every project will fail. It depends on location and supply.” Excluding Greater Bangkok, Chachoengsao’s two neighbours will be the top two provinces in the country with the largest number of unsold units by the end of this year, with 35,142 in Chon Buri and 10,475 in Rayong. This means the total number of unsold units in the eastern region will remain the largest among the four regions at 51,707, representing more than half of the total 94,826 units in the 20 first- and second-tier provinces. As of the first half last year, Chon Buri saw 37,907 unsold residential units worth a combined 132.3 billion baht. Of this number, 8,961 units worth 30.75 billion baht were completed or ready to transfer, the largest among the 20 provinces. They included 4,583 low-rise units worth 13.9 billion baht, 4,338 condos worth 15.68 billion baht and 40 villas worth 1.17 billion baht. Mr Vichai said the number of unsold units in Chon Buri in the first half of 2018 rose from 30,376 units as of the second half of 2017 because sales of new supply launched in great number in the first half were low. In the first six months of 2018, new supply launched in Chon Buri totalled 9,850 units from 63 projects and recorded just 2,311 units sold, representing 23%. Risinee Sarikaputra, research and consultancy director at property consultant Knight Frank Thailand, said the condo market in Pattaya will remain unfavourable this year because Chinese buyers, the major market, have slowed purchases since last year’s Phuket boat accident. “A weak yuan is another factor,” Ms Risinee said. “Pattaya’s condo market is not good, and the trend will continue throughout this year. No listed developers plan to launch new supply. Some offered a 30% discount to shift unsold completed units.” The average take-up rate of condo supply launched in Pattaya during January to September 2018 dropped to 62% from 74% in the same period in 2017, according to Knight Frank. The central bank’s macroprudential policy is expected to directly affect the purchasing decisions of some Thai buyers who wish to buy real estate in Pattaya as a holiday home or an investment. Ms Risinee said the market will rebound in the future as Eastern Economic Corridor initiatives spur new demand. According to the REIC, unsold residential supply in the 20 provinces that was completed and ready to transfer totalled 27,000 units worth a combined 99.78 billion baht as of the first half of 2018. The largest number was low-rise units in Chon Buri with 4,583 units worth 13.9 billion baht, followed by condos in the same province with 4,338 units worth 15.68 billion baht. The third largest was condos in Phetchaburi with 1,642 units worth 6.96 billion baht, followed by low-rises in Rayong with 1,462 units worth 4 billion baht, low-rises in Chiang Mai with 1,447 units worth 6.56 billion baht, and condos in Chiang Mai with 1,288 units worth 4.85 billion baht. “The general election this year will help stimulate the grass-roots economy nationwide, which will boost the purchasing power of people in provinces,” said Apa Ataboonwongse, president of the Thai Condominium Association.
‘‘ Our prediction does not aim to shock the market, but to show what the future situation will be so that developers will be more cautious. VICHAI VIRATKAPAN Acting director-general, Real Estate Information Center