Real Estate Business To Be Sluggish Until 2007

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Real estate business likely to be sluggish until 2007: KRC

BANGKOK: -- The real estate business is likely to be sluggish until 2007 since purchasing power of consumers has contracted upon an upward interest rate trend, according to the KASIKORN Research Center.

The leading think tank projected the real estate business condition would be affected by the continued increase in interest rates, at least in the next two years.

The number of completely built housing units in the first half of this year totaled 32,400, up 24.3 per cent from the same period last year.

The sharp increase stemmed from the fact that the number of the finished housing units had significantly decline in 2004 since the government-supported measures to reduce property taxes and fees ended.

It said the real estate business grew 10.9 per cent in the second quarter of this year compared with the growth of 40 percent in the first quarter.

Housing projects expanded 11.1 per cent in the second quarter of this year compared with the growth of 37.2 per cent in the first quarter.

The number of finished housing units averaged 3,132 per month in the first quarter and 2,804 per month in the second quarter of 2005, down from 4,618 per month in the fourth quarter of 2004.

The investment in housing projects nationwide grew 13.6% in the second quarter of this year, down from 16.6% in the first quarter.

Such the downward trend is anticipated to go on given a continued decline in the number of applications for the building of housing projects countrywide in the past several months.

KRC forecast the purchasing power of consumers would continue to decline from the second half of this year until 2007 since their burdens on spending and financial costs for housing purchase would outpace their incomes.

However, the trend is likely to improve in 2008 when inflation rates and oil prices are expected to decline, and interest rates are set to rise more steadily. After that, the purchasing power of consumers would turn to increase.

--TNA 2005-09-12