Wage Hike Pulls Home Prices Up
Residential houses’ price are expected to increase with the implementation of wage hike on April 1st 2012. Based on a study conducted by The Nation, prices are predicted to increase by three percent in the second quarter of 2012. This will yet continue to increase to five or seven percent in the third quarter of the year. The increase in minimum wage would mean higher construction costs to property developers. Around 20% of the costs developers incur are dedicated to labor according to a survey done by The Nation. With this scenario, property firms are inclined to reduce manpower needed in construction.
Pruksa real estate president and chief executive Thongma Vijitpongpun thinks that residential unit prices may increase to 3% to 5% relative to its size. On the other hand, Saenphin Sukhee, vice president of Quality Houses said that the rise in wage and in construction cost may lead to an increase of 5% to 10% according to the competition in the area and its location. Knowing that the labor cost covers about 20% of the whole construction project, SC Asset Coprporation chief operating officer Kree Dejchai stressed that developers will be looking for other means to minimize this expense.
Mr. Dejchai said that they are beginning to utilize prefabrication in building new homes that are below 5 million Baht to decrease labor cost. He added that this will also reduce the construction time to four and a half months rather than the conventional eight months. Sansiri president Srettha Thavisin said that the company had allotted about 600 million Baht to establish a prefabrication plant in anticipation of this year’s projects. This will reduce labor cost and even speed up construction time while trying to maintain last year’s level.