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Housing market outlook 2019
AREA Press Release No. 33/2019: January 23, 2019

Dr.Sopon Pornchokchai, Ph.D. Dip.FIABCI, MRICS
President, Agency for Real Estate Affairs (AREA)

There was a significant boom in real estate market in Thailand in 2018. However it might be a burst of the bubble in the markets in 2019. Why so soon?

 

According to the Latest survey of the Agency for Real Estate Affairs at the end of 2018, It was found that there were 125,118 units newly launched housing units in the Bangkok Metropolitan Region. This was a significant increase of 9.3% from 2017. This was the largest supply in the last five years since 2014.

 

In terms of value, The newly launched housing units were worth around Baht 565.811 billion with 28.1% increase from last year. This was really a very big increase. It was the largest launched value for the past 25 years.  Therefore the boom was confirmed. In addition the average price of a housing unit was increased from Baht 3.858 million to Baht 4.552 million during 2017 to 2018.

 

Pruksa Real Estate Plc what the largest real estate company launching new supplies into the market in 2018 with a total project of 46 with 15,574 units at a total value of Baht 47,007 million. However in terms of value of the development, Sansiri Plc and AP (Thailand) Plc launched more in value (Baht 54,236 million and Baht 47,079 million). Although They have smaller number of projects and units, they developed higher price units.

 

Although the GDP of Thailand has been growing, the general public did not feel so. Many people cannot afford to buy a house in an open market. Around 2/3 of the supplies were those offered at over Baht 3 million. According to the Agency for Real Estate Affairs, 20% of the buyers were foreign news and another 15% were local speculators. The end users were accounted for another 65% recently for listed companies and the number of foreign buyers could reach 40%

 

Most of the foreign buyers were Chineses. If the trade war between China and the United States of America was more intensified, The number of Chinese buyers might be significantly dropped. They may not come to finalize that buying after booking. Some of them might resell their units cheaper then the developers. This would be a disaster for Thai developers, bankers, financiers and investors. Consequently the bust of the market can be foreseen.

 

Dr.Sopon said that there should be a managed supplies into the market in order to prevent the problem of over-building. Zones of oversupplied should be kept in mind for unnecessary additional supplies. The escrow account must compulsorily  be applied to protect both the buyers and the developers. Existing stocks of developers must be sold prior to adding new supplies into the markets.