Mortgage loans made by commercial banks in the first quarter totalled Bt612.6 billion, a drop of 1.9 per cent from the previous quarter, when lending grew 3.8-per-cent from last year's third quarter.

It was the first quarter-on-quarter contraction since the fourth quarter of 2003.

Despite the contraction, housing loans in the first quarter still grew by 9.4 per cent over figures for the first quarter of last year.

Home loans made by the Government Savings Bank (GSB) also decreased slightly in the first quarter, by 0.15 per cent to Bt115.8 billion, after a 2.5-per-cent rise in the fourth quarter of last year.

It was the GSB's first quarter-on-quarter drop since the first quarter of 2000, but it still showed an increase of 7.6 per cent year on year.

The slowdown could signify the start of a slackening property sector, after demand for upper-range housing has plunged. The central bank said many negative economic and political conditions have aggravated the sector.

A real-estate expert said political turmoil and the economic slowdown, along with high inflation and rising interest rates, have led consumers to delay making home-buying decisions.

"They [consumers] are waiting for constant and stable situations before making their decisions," she said. The overall finance industry made mortgage loans of Bt1.2 trillion in the first quarter, up by 0.45 per cent, but still well below the growth of 2.9 per cent in the fourth quarter of last year.

Despite the trend, the Government Housing Bank (GHB) showed its key role in providing home financing by recording 19 per cent growth in loans during the first quarter when compared with the first quarter of 2005.

The GHB's loans rose by 3.9 per cent, quarter on quarter, to Bt488.2 billion. This compared with 2.7 per cent quarter-on-quarter loan growth in last year's fourth quarter.

Home loans provided by finance companies and credit foncier companies fell significantly in the first quarter by 76 per cent and 64 per cent, respectively.

A source said although demand had declined, property developers were able to adjust to the worsening conditions. Some have postponed investments while others have reduced the pace of development or shifted to lower-value markets.

Anoma Srisukkasem

The Nation