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Sales agencies get bullish on resale market

Tuesday, 08 July 2008

The Nation July 3, 2008 Firms see demand for pre-owned units as purchasing power declines Home-buyers who buy residential properties in Bangkok and suburban areas through resale will benefit from the tax incentives and get 15 per cent to 20 per cent lower prices compared to new residential projects launched this year, according to a survey conducted by The Nation on Monday. Property agency BCP Housing managing director Somsak Chutisilp said resale prices for homes in Bangkok and suburban areas are 15 per cent to 20 per cent lower than new projects in the same location, depending on the condition of the property. "Most of the residential units for resale, including detached houses, townhouses and condominiums, are three to five years old. Thus, their construction cost is lower than new houses that will be built and delivered this year. This is why the prices are lower than the new projects launched this year," he said. Residential units for resale are located closer to the mass transit system than the new projects. With this view, most home-buyers who want to lower their cost of living, will choose to buy second-hand homes rather than invest in new residential projects. The most popular size for residential units on resale is expected to be mid-sized houses priced lower than Bt4 million per unit. This is because there has been a slight drop in the purchasing power of potential home-buyers and commercial banks have also stuck to providing mortgage loans, Somsak said. He said home-buyers who buy homes in a resale can now avail of the tax incentives offered by the government for the property sector. The incentives include a special-tax reduction from 3.3 per cent to 0.01 per cent, transfer fee from 2 per cent to 0.01 per cent and mortgage-registration fee reduced from 1 per cent to 0.01 per cent. Due to the demand for properties in resale, BCP Housing's sales for the first half of the year grew 20 per cent from Bt300 million posted in the corresponding period last year. The company had recorded total sales of Bt900 million last year. A total of 70,000 to 80,000 units a year are sold in the residential-resale market in Bangkok and suburban areas. Realty World Alliance managing director Visit Kunatharakul said although prices of pre-owned residential units will be lower than new projects, home-buyers' purchasing power has dropped due to political upheavals and the rising cost of living. He said many home-buyers have delayed buying a house in resale in the first quarter because they waited for the government's tax package to come into effect. However, despite the tax package, some home-buyers chose to wait out the second quarter as well due to political upheavals. Other home-buyers decided to reduce the size of the house they would buy to get under the Bt4-million-a-unit mark. Even then, residential units available for resale at prices lower than Bt4 million still give a customer more utilisation space as compared to new projects in the same location, he said. Visit said the company is waiting to see if the resale market will be better in the second half of the year compared to the first half of the year. The company recorded sales of Bt800 million in the first five months of this year, a drop of about 5 per cent compared to the same period last year. "The overall resale market may be better than last year, but we have more residential units priced higher than Bt4 million. As a result our business recorded a slowdown compared to others sales agencies," Visit said.

 

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