According to the latest research from RHB Securities, the property market in Thailand is in tough situation at the moment but the outlook still remains positive. It was noted that the property market still appears to be one of the country’s most stable sectors and should be able to cope with the continued economic downturn.
Presales in Thailand remain soft and developers continue to push pack major new launches in order to focus more on clearing current inventories. The overall operating environment remains tough as banks continue to reject mortgage applicants at a higher rate than usual. This trend is likely to continue over the course of the next three months as developers aim to take advantage of the Government’s stimulus package which expires in April. There is a chance it will be extended until the end of 2016 but this is not confirmed.
Thai authorities and financial institutions have been able to manage the potential risks by tightening credit, setting appropriate loan-to-value ratios and introducing greater scrutiny of loan applications. While this has made it difficult for buyers to get loans, it has been done to prevent a high number of loan defaults. RHB noted that the recent property stimulus package was carefully crafted with an intention to clear existing inventories within six months. Many developers had a significant backlog of units and had been unable to move a majority of these.
And while developers continue to focus on shifting current inventory, by the second half of the year new launches are expected to resume. The combined sector’s presales growth is estimated to be 15 percent Y-o-Y. This is higher than RHB’s earlier expectation of eight to ten percent growth. Condominium presales growth is expect to be around 21 percent Y-o-Y while landed property is estimated to be nine percent Y-o-Y.
Bangkok’s mid- to high-end segment is likely see greater competition according to RHB as more developers, including many large companies, enter it. Developers prefer this segment as buyers are likely to have no problems securing loans to buy units and many investors opt to pay cash.
