Developers consider slowing property launches as new loan-to-value scheme bites hard

By Somluck Srimalee The Nation

 

 

In an attempt to boost presales for the rest of this year, listed property firms are planning to launch new residential projects worth more than Bt200 billion.

 

Anticipated presales during the second quarter dropped after most homebuyers decided to delay purchasing residences and commercial banks rejected applications for mortgages under the new loan-to-value measure, which requires a 10-per-cent down payment on a first home.

 

A survey conducted by The Nation shows that most listed property firms will continue to launch their new residential projects in the second half of this year in the belief that consumer confidence will recover when the country has a new government later this month.

 

For example, Origin Property plans to launch six new residential projects worth Bt8.1 billion in the third quarter of this year, as it drives towards its goal of presales totalling Bt28 billion by year’s end. This follows the company’s total presales worth Bt7.29 billion in the second quarter of this year, boosting its total recorded presales to Bt13 billion for the first half of 2019.

 

AP (Thailand) plans to launch 23 new residential projects worth Bt27.26 billion, 22 of them single detached house and townhouse projects and the other a condominium project worth Bt6.3 billion. This is to boost its total presales to Bt41.8 billion by the end of this year. For other planned developments, see graphic.

 

“We are continuing to launch our new residential projects and are focusing on the middle market, who still have the purchasing power to buy residential properties in the price range of Bt2 million and Bt5 million,” Origin Property Plc’s chief executive officer Peerapong Charoon-Ek said recently.

 

However, some property firms are concerned about the market sentiment and have put off launching their new residential projects for the rest of this year.

 

For example, Ananda Development, is considering a downward revision of its residential launches for the remainder of 2019 in light of the drop in demand from both domestic and foreign investors.

 

“We initially planned to introduce 10 new residential projects in this year worth more than Bt20 billion. During the first half of this year, we launched two new projects according to our plan, but we are considering putting some of the further eight projects on hold,” the company’s chief financial officer Chaiyuth Chunnahacha said recently.

 

Earlier, the company targeted presales of Bt36 billion and a transfer of properties worth Bt36 billion by the end of this year, up 14 per cent and 9 per cent respectively from the same period last year.

 

Now the company may revise its presales and transfer value as the demand to buy residential properties has continued to drop since the new measure to reduce loan-to-value became effective on April 1, 2019, he said.

 

LPN Development Plc is also thinking of revising its business plan. 

 

“We are considering what we will do now that the demand to buy residences has dropped and up to 50 per cent of our customers have been turned down for mortgages by the commercial banks following the Bank of Thailand’s restrictions on approving loans under the new loan-to-value rule,” said LPN Development Plc’s chief executive officer and managing director Opas Sripayak.

 

According to the latest survey by property agency firm Collier International Thailand, a total of 26 new condominium projects with 9,632 units worth Bt74.87 billion were launched in the second quarter of this year, with 38 per cent of total already sold. This is lower than for the same period during the period 2017 to 2018, which recorded sales of 57 per cent and 65 per cent from total new residential projects launched. 

 

“The demand to buy residential properties in the second quarter of this year dropped after the new loan-to-value rule came into effect,” Collier International Thailand’s associate director of the research department Pattarachai Preechapanich confirmed.

 

He forecast that the property market would face tough times for the rest of this year as homebuyers continued to be concerned about the country’s economy and the loan to value rule continued to bite.

 

Source: http://www.nationthailand.com/property/30372125

 

-- © Copyright The Nation Thailand  2019-07-02

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A 10% down payment seems a bit o low side.  I am left wondering what it was before.  Debt bubble on the way

3 minutes ago, chilli42 said:

A 10% down payment seems a bit o low side.  I am left wondering what it was before.  Debt bubble on the way

Or housing bubble but most likely both and new government will not ease banks lending criteria even

assuming new government will be formed and functional. 

A survey conducted by The Nation shows that most listed property firms will continue to launch their new residential projects in the second half of this year in the belief that consumer confidence will recover when the country has a new government later this month.

 

And this years ridiculously optimistic prize for the sentence of the year goes to....????

2 hours ago, chilli42 said:

A 10% down payment seems a bit o low side.  I am left wondering what it was before.  Debt bubble on the way

It was as low as ZERO.

There's definately a ton of bad debt in Thailand that will never be serviced, i see tons of BULK sales atm listed like this: https://www.ddproperty.com/en/property/for-sale-bulk-condo-sale-9-units-hot-deal-only-80-000-baht-m2-for-sale-6814058

 

That never caught my eye before... could be a good opportunity if that lil bubble bursts, if it's really extreme than they might even open the market for foreigners, losing cash is the only way thais learn anything anyway

 

 

I know my new landlord bought his condo from my old landlord just showing pictures of it that i took while living in and showing it to the bank, they gave him the whole loan and 2 weeks later he got the chanote in his name. This wasn't for a cheap condo....

 

22 hours ago, chilli42 said:

Debt bubble on the way

Not at all.

 

Debt bubble already here.

Save your cash. Might be a good time to buy outright in the coming years. This looks like the conditions for a housing glut?

How are pre-sales and mortgages linked?  I thought you can only get a mortgage on a completed unit, and with pre-sales you will have more than the minimum 10% equity well before completion, no?

 

The broader market is another story.