BOT head cautions property speculators

Economy July 09, 2018 01:00

By Wichit Chaitrong
The Nation

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Big data analysis of electricity consumption led to insight about condo purchases

Big data has suggested that the property market does not look as good as it seems to be, warns Veerathai Santiprabhob, the Bank of Thailand’s governor.

While property developers could sell out new residential units, the second-home market is a different story, he said.

“When the central bank applies big data analysis by using informaฌtion about electricity consumption, it helps us to understand the realestate market much better,” Veerathai said in an exclusive interview with Nationmultimedia Group.

Consumption of electricity in ageฌing condominium buildings had been in decline for some time, he said – and this suggests many people have moved out of old condominiums to new condominiums.  

“It is a warning sign for investors making purchasing real property and hoping to gain by renting it out,” said Veerathai.  

The rental rate is currently flat, while nonperforming loans derived from mortgage lending in some subsectors are still rising, he said.

According to the central bank data, non-performing mortgage loans totalled about Bt 24.9 billion at the end of this year’s first quarter. That represented 5.6 per cent of the total non-performing loans in the banking system, or 3.6 per cent of total mortgage loans.

Under pressure from low deposit rates, many investors have searched for yield, with some expected to buy residential units based on a plan to rent them out, according to Veerathai.

Using electricity consumption to shed light on the property market is part of the central bank’s effort to use big data to analyse the market in order to better understand it, he said.

Traditional survey data is not updated, while big data can provide realtime information and so create new indicators, he said.   

Big data can be harvested from many sources, including even Google web pages.  

The big data analysis serves as an early alert about upcoming serious issues, he said.

Previously, the central used big data to support measures to tackle rising debts among those aged 29-30 years old who were borrowing too many personal loans, he said. The BOT used data from the then National Credit Bureau Co, to back up this action.  

“We have shifted from sentiment-based policy to evidence-based polฌicy,” said Veerathai.   

The central bank recently signed an agreement with the Labour Ministry to use labour information for economic analysis.

Commenting on the health of the property sector, Samma Kitsin, real estate economist, said that he expected the new-home market to expand five per cent this year.

Apart from ordinary homeowners, there are two groups of investors who make investments in real estate currently, he said. The first group comprises those buying booking tickets for new projects, then quickly selling them to other people. Members of the second group plan to buy residential units and later rent them out to gain financially.

Earnings from a rising stock index usually made speculators active, and vice versa, he said.

Many investors look for residential units in prime areas where large numbers of expats stay, for example along Sukhumvit Road and the inner downtown, he said.