By Nikki De Guzman:
Thailand’s property sectors are mixed on the possibility of a market bubble, with the Bank of Thailand (BoT) expressing caution that this imminent concern may cause huge losses.
“We need to be cautious and monitor the [property market] situation very closely and prepare measures to cope with any possible problem,” noted Songtham Pinto, Director of the Macroeconomy Division at the BoT, during a property seminar organised by the Real Estate Information Center (REIC).
On the contrary, developers are quite confident that the improved residential market now controlled by large firms, will be able to withstand any risks. They said that wrong measures could fall short of averting the problem, and affect real buyers instead.
“A lower loan-to-value ratio will not prevent short-term speculators, as they can still sell their booked units at the same or lower prices than they paid, but this measure harms real buyers who really want the units,” said Atip Bijanonda, President of the Housing Business Association.
Meanwhile, Prasert Taedullayasatit, Chief Business Officer of the SET-listed Pruksa Real Estate, is conclusive that there is no property bubble, although there is “an oversupply in some locations.”
Atip noted that a bubble cannot co-exist with an oversupply, explaining that bubbles happen when limited supply pushed prices up while an oversupply causes prices to remain stagnant, drop or increase slightly.
“An increase in prices is driven by the development cost structure, which is always revised up. In some cases, it is driven by developers buying land to develop a project regardless of how high land prices are.”
Chatchai Payuhanaveechai, Executive Vice President of Kasikorn Bank, also ruled that Thailand does not show any signs of a bubble or oversupply. The higher prices were rather due to higher labour costs and land prices.
Nikki De Guzman, Junior Reporter at PropertyGuru, wrote this story. To contact her about this or other stories email nikki@allproperty.com.sg
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