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Bangkok and suburbs to witness market slump: research

Thursday, 24 July 2008

By The Nation July 21, 2008 The property market in Bangkok and suburban areas is expected to drop 7.2 per cent this year compared to last year, due to a rise in cost of construction and a slump in consumers' purchasing power, research by Kasikorn Research Centre showed. The research shows that although the government launched tax package to boost property demand on March 28 and a number of commercial banks introduced financial packages to boost their mortgage-loan business in the first half of the year, demand for residential units has continued to drop. The government's tax package, which reduced special business tax, transfer tax, mortgage fee and transfer fee, did not have a positive impact on the market because home-buyers are facing far more negative factors, such as a rise in cost of living following the oil price increase and prices of several goods rising. Home-buyers' income is also expected to drop due to the country's soaring inflation, which has touched a double-digit figure this year. The research says that demand for residential units in Bangkok and suburban areas will stand at 67,600 units this year, a drop of 7.2 per cent from 72,808 units recorded at the end of last year. Detached houses, double houses and townhouses are expected to drop 9 per cent from the 32,741 units last year to settle at 29,700 units. Home-builders market will also experience a drop of 16.8 per cent from 25,251 units last year to 21,000 units this year. However, the condominium market will register a 14-per-cent growth, from 14,816 units last year to 16,900 units this year. Demand for condominiums has registered growth despite the oil-price rise because many home-buyers have decided to buy city condominiums to reduce their transportation costs. However, home-buyers have to select projects based on whether they offer ready-to-stay condominiums, as opposed to projects that are undergoing construction. This is because property developers are expected to raise condominium-project prices after costs of key construction materials, such as steel, have risen significantly

 

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