Builders to mark up home prices

Speaking at a seminar yesterday on how to build quality houses amid rising oil prices, Titanun Mallikamas, a director of the Bank of Thailand's office of macroeconomic policy and analysis, said businessmen have to consider three risks when they manage their businesses in the second half of this year.

These are high inflation, political turmoil and world economic recession.

"We believe the country's inflation rate will be higher than the projected 5 to 6 per cent. This will have a negative impact on both raw materials and management costs. Businessmen should understand how to protect themselves from these risks," he said.

He added that inflation also has a negative impact on savers because the inflation rate is now higher than the savings rates and returns on bank deposits are in negative territory.

Given the country's current economic environment, Titanum warned that property developers and home-building firms have to manage their risks when facing an economic downturn.

Managing director of home-building firm The Emperor, Suratchai Kunghakij, said following the country's economic downturn and the rise in construction costs, home-builders have to increase their prices by between 10 and 15 per cent in the second half of this year after increasing prices by nearly 10 per cent in the first half.

Meanwhile, developers also have to face high construction-material cost increases that would lift the prices of new houses by between 5 and 10 per cent in the second half of this year, he said.

Thananit Ratananont, SCG Distribution's director for distribution, said that to help home-builders and property developers manage their costs, the substitution of raw materials would be one choice for them.

A number of construction raw-material producers have tried to develop innovative products to replace natural raw materials at reasonable prices to help contractors, home-builders and property developers to reduce their costs.

Prasong Tarachai of the Engineering Institute of Thailand said that managing construction processes was one way to reduce construction costs. Property developers and home-builders have to plan and consider the raw materials that they use.

They have to manage their construction processes carefully, he said.