[Special Scoop] Public investment in 2017 will remain the key component in boosting Thailand’s GDP. The government has a solid action plan that will hopefully drive the country’s GDP upward with an estimated growth of 3.2 per cent predicted. Despite the overall healthy image of Thailand’s economy, the real estate sector remains uncertain with a restriction on home mortgage and high household debts resulting in last year’s mortgage rejection rate to be 30 per cent, 10 per cent higher than 2015.
However, Kasikorn Research Center estimates that the loan volume at Siam Commercial Bank (Thailand) will grow by 4 per cent, equivalent to a THB 3.4-5.6 trillion increase from the year 2016 which saw only 2.5 per cent growth. The mentioned loan volume growth is due to the stimulus schemes, mid-year budget, and an increase in energy prices that altogether stimulates demand for the loans. SCB is also expected to expand its customer base by launching new technology that could analyse and assess the loan more effectively.
The personal loan segment also looks positive with 320,000 consumers, around 30 per cent, having paid off their loans in the first-car campaign. Meanwhile, several financial institutions are willing to offer certain loan types as concerns about debtors’ credit declines. Kasikorn Research Center expects personal loans in 2017 to grow by 5.5 per cent.
Meanwhile, home mortgages are expected to have the same growth rate as the previous year since there’s still no stimulus scheme for the real estate sector to boost demand this year. It is important to note that home mortgages are more restricted than other loan types due to the high risk of default. Refinancing will also continue this year, but the practice is not accounted in the overall growth of home mortgages.
Refinancing competitions among financial institutions will remain calm until the situation gets clearer in the second half of this year. The borrowing cost is higher, however, especially for quality-credit borrowers who comply with floating interest rates.
Beside the loan trends, real estate players will also look at property supplies as well. There were 79,015 units launched during January to November last year. Looking at the total number of lands registered for property developments, there were 40,886 units from 616 developers in the housing estate, and 104,126 units in 747 projects from 323 developers in the condominium segment during the same time period.
