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Q4 expected to bring signs of housing market revival

Bangkokpost, Friday September 07, 2007

New housing launches will pick up in the fourth quarter of the year as political concerns ease ahead of the Dec 23 elections, says Sopon Pornchokchai, president of the property consultant Agency for Real Estate Affairs (AREA).

He said many developers had delayed launches during the first eight months of the year as they were wary of the market situation and consumers were not confident about spending.

In any case, he said, the fourth quarter of the year was normally the most active period for housing sales and promotional activities.

AREA's survey found new launches of housing supply in August 2007 were extremely low with only 1,453 units worth 4.6 billion baht, lower than the normal rate of 5,000 units worth up to 10 billion baht.

Condominiums predominated last month with 605 units, followed by 500 townhouses and 216 duplex units.

In terms of price, the most popular range was 1-2 million baht with 555 units, followed by 385 units at 2-3 million baht, and 348 units at 3-5 million baht.

By types and prices, townhouses priced at 1-2 million baht totalled 249 units, followed by 208 duplexes priced from 1-2 million baht and 197 condominiums priced from 2-3 million baht.

During the first eight months of the year, the number of newly launched residential units totalled 40,684 units worth a combined 88.78 billion baht. About 60% were condominiums, followed by townhouses with 7,692 units, or 19%.

By price, the largest portion or 25% were condominiums priced at 1-2 million baht, followed by condominiums priced from 500,000 to one million baht, and townhouses priced from 1-2 million baht.

From January to June, total take-up was about 31,000 units. About 15,000 were old stock and the rest were new homes launched during the first six months of the year.

Condominium sales during the first half improved slightly to 80% of units launched from 79% in the second half of 2006. But the average number of units sold per project per month dropped to 20 from 27 units as of the end of 2007 and 57 in the first half of 2006.

Mr Sopon said an oversupply was unlikely this year as housing demand still exceeded newly launched supply. New supply this year is expected to total 61,000 units against demand of around 80,000.

AREA estimated an average unit price for homes launched in 2007 at 2.182 million baht, down from 2.83 million last year and 3.08 million in 2005. But the firm believes the average would rise next year with the emergence of higher-priced detached houses as the economic outlook improves.

Mr Sopon said there was a cumulative housing inventory of 98,561 units as of the end of June 2007, accounting for 2.3% of all housing units in Bangkok, while the capital's population growth was 2% per year on average.

''This rate is not so high as we faced a 4% rate or about 120,000 to 140,000 units of inventory in 1997 during the economic crisis,'' he said.

As of the end of June, 1,276 existing housing projects still had units available for sale. Of that number, 820 sites had more than 20 units available.

AREA also surveyed the value of real estate in Thailand through questionnaires taken from Department of Land offices nationwide. Residential property totalled 28.22 trillion baht and agricultural property 19.31 trillion (see table).

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