Real Estate Growth Expected to Shrink by 5%

The president of the Government Housing Bank forecasts growth in the real estate market to contract by five percent this year due to many negative factors, such as the hike in interest rate and oil price, inflation and local political instability.

Government Housing Bank, or GHB, President Worawit Chailimpamontri, in his capacity as the Real Estate Information Center head, said he expected the real estate sector to continue to expand this year, but it is likely to grow less than last year's figure by five percent in accordance with the slower growth of the local economy.

Worawit said negative factors, such as rising inflation, natural disasters, the increase in interest rate and the political instability, have effected the development of the real estate sector.

For this year, Worawit said property developers are continuously launching new condominium projects, especially on the outskirts of Bangkok.

He expected new mortgage lending by all commercial banks, including the GHB, to stand at 300 billion baht this year from 350 billion baht last year.

The GHB president added the bank could increase its mortgage interest rate if the central bank's Monetary Policy Committee raises the policy interest rate at its next meeting on March 10.

The committee earlier hiked the rate by 25 basis points at its meeting last month.

If the policy interest rate adjustment is carried out by the Monetary Policy Committee, Worawit said the GHB will have to raise its lending rate by about 50 basis points.

He expected the policy interest rate, which is currently at 2.25 percent, to reach three percent by the end of this year, thus bringing up costs for business operators and home buyers.

-- Tan Network 2011-02-09

Of not much use to give a general 5% figure. Try giving a breakdown by classes and locations.

Agreed Trogers, was he talking Office, Industrial, Residential (and sub-markets thereof Singe Homes Condominiums, Grade A B C ... etc)

For the head of the Real Estate Information Center, he sure didn't have much detailed information to share.

Growth and Shrink in the title...what do they teach kids at schools these days

Well, if the economists are convinced that all of asia either pays cash or puts down 50% against mortgages then the growth in shrinkage of mortgage lending from 350 billion to 300 billion is a wee bit more shrinkage than 5%. Clear as mud.