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First-half presales could slump by 40%

Property

Property

Numbers down 42% in Q1 as purchasing power falls amid higher personal debt, sluggish economy and political turmoil

The residential property market in greater Bangkok could drop by up to 40 per cent in terms of presales in the first half of the year, following a first-quarter fall of 42 per cent.

The significant market slowdown in the first three months was due in large part to reduced purchasing power, as many home-buyers faced a high debt burden arising from the first-car scheme and other forms of personal debt.

A survey carried out by The Nation among the leading listed property companies found their first-quarter presales were sharply lower than in the same period last year, as many home-buyers had delayed their decision to purchase a home out of concern over their debt burden and future earnings - amid the country's sluggish economic growth and the prolonged political turmoil.

Pruksa Real Estate reported presales worth Bt8.19 billion in the first quarter, a drop of 34 per cent from the same period last year, while Sansiri posted presales of Bt4 billion - some 80 per cent down, year on year.

AP (Thailand) reported presales of Bt2.16 billion, 31 per cent down on the first quarter of 2013, while LPN Development announced presales worth Bt3.2 billion for a 53-per-cent fall.

Quality Houses recorded presales worth Bt1.2 billion, down nearly 50 per cent from the same quarter a year ago, while Sena Development posted Bt400 million - some 30 per cent lower than its estimate and nearly 40 per cent down, year on year.

Supalai, meanwhile, recorded presales of Bt3.8 billion in the period, which were 5 per cent higher than a year earlier.

Financial results hit

Leading developers' net profit also declined in the first quarter, with more customers delaying having homes transferred to them as they were unable to get bank approval for their mortgage applications, due to a higher debt burden arising from credit-card spending and commitments under the first-car scheme.

DBS Vickers Securities (Thailand)'s analysis shows that listed residential developers' financial results for the first quarter will be lower than in the same period last year, partly due to delayed launches of new projects in January and February.

Although they did resume launches in March, the market was still suffering from a lack of confidence on the part of home-buyers, the securities house said.

Maybank Kim Eng Securities (Thailand)'s research shows that residential launches in greater Bangkok in the first quarter provided 20,433 units and Bt56.47 billion in terms of value - respectively some 42 per cent and 43 per cent lower than in the same period last year.

"We predict that the property market will drop by 10 per cent this year," the company said in its research paper.

Meanwhile, KKtrade Securities's research shows that although the number of newly registered homes had recovered in March, presales and transfers to customers in the first quarter were still lower than in the same period last year.

As a result, the company estimates the total revenue and net profit of listed property firms in the first quarter of this year will be lower than in the same three months of last year.

Listed property firms account for up to 60 per cent of the overall residential market value of Bt300 billion a year in greater Bangkok.

According to a survey by The Nation, commercial banks' restrictions on mortgages currently result in 20-30 per cent of new home-buyers having their loan applications refused.

This has contributed to the first-quarter financial results of leading developers being lower than in the same period last year.


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