Property prices in Thailand to experience steady growth

Concerns have arisen that the swift growth of residential projects in Bangkok has been driven by unsustainable returns in people’s wealth.

Urbanised lifestyles and a healthy economy could contribute to the steady growth of Thailand’s property market over the next five years, reported the Bangkok Post.

Recently, concerns have arisen that the swift growth of residential projects in Bangkok and other key provincial cities in Thailand has been driven by unsustainable returns in people’s wealth from the stock market, spurred by growing foreign portfolio investment.

Property prices have continued to rise over the past ten years, and could continue to rise steadily over the next five years according to Kitti Patpongpibul, chairman of the Housing Finance Association.

Kitti has voiced concerns about the economic stability of bank lending per appraised value, the loan to value ratio, of 90 percent condominium units worth THB10 million (US$334,557) and less, and 95 percent for single houses. These ratios are greater than the 70 to 80 percent of other countries in the region.

The economy has no measures in place to encourage private banks to lend to low-income groups, according to Kitti. In addition, town planning law has few incentives for the private sector to develop residential property for the same demographic.

New measures could include increasing the permitted utilised area per plot to offset losses by developers who build housing for low income groups, according to Kitti.

“Property prices could increase for at least the next five years. It is a concern that it could breed more social discontent as the rich can own expensive property while low-income people lack access to decent housing,” said Kitti.

Healthy consumer power could spur steady growth in the property market alongside the economy, according to Songtham Pinto, a senior economist from the Bank of Thailand, who warned that the government should not kindle the economy to achieve unsustainable growth.

“We are concerned that economic imbalances might happen if fiscal and monetary policies aim to stimulate consumption while banks’ credit growth is already growing robustly at 16-18 percent,” he said.

Household debt has increased to 73 percent of gross domestic product as a result of the low interest rate and state owned banks’ ventures into customer loans.

 



Filed Under: NewsNews by CountryThailand

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  1. Michelle says:

    Economic imbalance is not impossible if there will continuous money lending even though the interest is robustly increasing. Smart monetary circulation would make the economy healthier than letting so much spending and borrowing happen.

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