The property business overall will record flat growth this year and there is a mild risk of a speculative bubble in low-cost housing, according to the independent real estate consultant Agency for Real Estate Affairs (AREA).
The agency, which conducts field surveys twice a year, found 1,183 projects still open for sale as of the end of last year. Of the total, 843 projects have at least 20 available units.
AREA chairman Sopon Pornchokchai forecast that low-priced condominiums and housing units developed under BoI Home incentives from the Board of Investment (BoI) would dominate the market this year.
The agency sees bright prospects for single houses priced from 1-3 million baht due to strong demand from middle-income earners. It also sees a better outlook for townhouses priced below 1 million baht and condominiums at 1-2 million. Both are promoted by the BoI and there is demand from young people as well as some speculation, it said.
Condominiums priced from 3-5 million baht located near mass-transit routes are also expected to be attractive due to their irreplaceable locations.
“The push to purchase government-promoted housing units may create bubbles, which could burst in 2010-11. This may cause difficulty in the future due to over-speculation so all parties should be cautious,” Mr Sopon said.
AREA found a total of 283 projects with 57,604 units, down 15% from 2009 . The value of newly launched projects last year was 182.99 billion baht, about the same amount as developments every year since 2006.
Mr Sopon said the average price of residential units rose from 2.289 million baht in 2007 to 2.718 million in 2008 and 3.177 million last year. Therefore, the diminishing number of newly launched units does not affect the total value.
He said one interesting finding last year was that newly registered housing units, estimated at 72,536, exceeded newly launched units. The number of newly registered units may not reflect market conditions because the units required between six months and two years to complete construction.
AREA estimated total units sold at 59,085 last year, with another 109,331 available in the market, accounting for 2.5% of the all 4 million completed units.
“This proportion of 2.5% does not yet show a critical situation, since it must be compared with 5% after the previous economic crisis between 1997 and 1999,” added Mr Sopon.
- Published: 23/01/2010 at 12:00 AM
- Newspaper section: Business
.
