An anonymous Bangkok Post editorial in today’s edition of Thailand’s most-read English language newspaper has suggested the time may be right for the Bank of Thailand to introduce curbs to prevent a possible serious oversupply situation in the Bangkok property and real estate markets.
Whilst noting that Thailand’s financial institutions have become more stringent with their property lending, and says mortgage rejection rates stood at 30 percent in 2017, it admins that many high-end condominiums are paid for in cash.
“With all the good news coming out of the country, one would expect that the property market would be doing well, but that is not the case,” the Bangkok Post article states.
At the end of 2017, the country had surplus residential units that would take almost 18 months to be absorbed if no new units are to be built.
Despite these market conditions, almost every developer has announced new projects worth many billions of baht.
Although the take-up rate during the last two quarters have been good, there are those who are still feeling the pinch of the slowdown, the column suggested.
Speculators who figured they would be able to make quick returns are seeing those dreams evaporate.
“Some are having to look at ways to exit as the projects come due and, by law, the buyers would have to take possession of the unit.”
Buyers with the aim of generating rental returns are starting to feel the pinch too, as rental yields have gone down by around 15 percent from their levels seen just about a year ago.
The Bangkok Post does not cite any source for these figures but assumes that the decline in rental yields can be attributed to the continued rise in supply.
“Ask any industry expert, and they will tell you that the shifting of the developers to create a recurring income is a sign that they are looking for ways to have a stable income flow amid possibilities that there could be some disruption to their revenues in the near future.”
It added that none of the developers would admit this fact for the fear that it may impact their sales.
“The fact that every Tom, Dick and Harry is now launching new [property] brands and projects is in itself a scary feeling, and it is the job of the authorities to nip this in the bud before it is too late.”
“Not too long ago, the Bank of Thailand came out with measures for property buyers in the high-end, a move it initiated to control the speculative buying of property in that segment.”
“With the middle- and lower-end segments of the market now feeling the pinch, it may be the right time to come out with some measures to slow the supply side of the equation, as it could help limit the adverse impact to the property sector,” the opinion piece concluded.