Good time to buy due to stable prices

Real Estate March 21, 2014 00:00

By Somluck Srimalee
The Nation

Developers keep prices at last year's levels as economy slows and mega-infrastructure programme delayed

Now is a good time to buy a home, with construction costs virtually the same as last year amid the economic slowdown, property developers and contractors said this week.
“Our construction-material costs this year have been maintained at just about the same as last year’s level, as the government’s Bt2-trillion mega-infrastructure projects have been delayed,” said Plew Trivisvavet, chief executive officer of top-three construction company Ch Karnchang.
He said that last year, contractors had been faced with two major issues. The first was a construction labour shortage, due to the rising property market and the government’s infrastructure-expansion programme, which had taken labour away from the residential sector. 
The second was rising construction-material prices, due to increased demand in what was then a rapidly expanding market.
Last year, the prices of key materials such as cement and steel increased by between 5 and 10 per cent from 2012 levels. This increased construction costs by 1-2 per cent over the course of the year.
Land prices below 2013 levels
Meanwhile, land prices this year are below 2013 levels, thanks largely to the suspension of the government’s mega-project programme.
The price of most of the land located close to the planned rail-system expansion had previously more than doubled since the plans were agreed in 2012, but have now fallen by between 20 and 50 per cent due to the delayed public-sector investment programme. 
This is the right time, therefore, for property companies to expand their investment by buying undeveloped land at reasonable prices to develop residential projects for sale.
Thamrong Panyasakulwong, president of the Thai Condominium Association, said land prices in those provinces due to benefit from the now-delayed rail-system programme had dropped by between 20 and 50 per cent.
Meanwhile, land prices in greater Bangkok areas situated far from the central business districts were being maintained, with most developers delaying their new residential launches in the first half of this year due to the ongoing political turmoil – and the likelihood that the impasse will be prolonged into the next quarter – he said.
This means home-buyers will be able to purchase a property at about the same price as last year, despite earlier concern that the cost of a new home would increase by 5-10 per cent this year, he added.
LPN Development managing director Opas Sripayak also sees residential prices being maintained in the first half of the year, due to relatively stable construction-material costs and slower overall demand caused by many potential home-buyers delaying their purchasing decisions during the current quarter as they wait for the country’s political crisis to end. 
This is, therefore, a good time for anyone planning to buy a home to take the plunge, he said.
Supitcha Chaipipat, managing director of home-builder Seacon Home, said the company was not increasing its residential prices, because construction-material prices had stayed steady for the past three months amid the slowing economy.
Normally, the company will hike its residential prices by between 3 and 5 per cent a year, she said.
Bumper week at condo show
Many home-buyers jumped on the market bandwagon and decided to sign up for a new home at last week’s “30th House and Condo Show” at the Queen Sirikit National Convention Centre, where Bt4 billion-worth of business was done – well over the Bt3 billion that had been estimated beforehand.
Newly mortgaged land worth Bt18 billion was also approved at the event. 
The most popular homes snapped up during the show were condominiums costing up to Bt2 million.
Anongluck Padhayanun, chairwoman of the organising committee, said around 100,000 people had visited the four-day event, with many of them now deciding to buy due to additional benefits on offer from property firms and special financial packages from the banks.
Many of them had previously deferred their decision to buy due to the worsening economy and the political situation.
Now is a good time to purchase, she said, as residential prices were close to last year’s levels thanks to stable building-material and land prices.
Moreover, developers were offering special campaigns at the show and maintaining their residential prices in a bid to boost first-quarter sales, she said, adding that they had been forced to act by the fact that the market was some 5 per cent down on the same period last year.