Connect with us

Property

Phuket Property: Central bank fears bubble

Legacy Phuket Gazette

Published 

 on 

PHUKET: The Bank of Thailand (BoT) might reel in the real estate market after detecting some hot spots, especially in the condominium segment for units priced under 3 million baht.

“A restriction on banks for 0% interest rates is one of the measures to control the market. But the central bank will have other measures such as tightening the loan-to-value ratio from 90% for condominiums to 85 or 80% if it believes that the condo market shows signs of speculation and may form a bubble in the near future,” a source said yesterday.

A team has been sent to meet with the top 10 listed property firms to ask them about the residential market, he said.

The main question concerns the supply and demand situation, as concern grows over indicators of a glut in the market. But most developers believe that the market still has demand to absorb the supply and that the market is still stable without any bubbles.

They admit that some locations may be subject to speculation, but say that does not change the overall property market.

The central bank may not impose any measures on the public but will use internal guidance such as asking banks to rein in lending. They may be asked to report project loans over 200 million baht, or to raise the credit score threshold for approving mortgage loans. These are some ways to control the property market without creating any panic.

In 2011, buyers of condos were required to make a down payment of 10% of a unit’s value and in 2012 buyers of low-rise residences, both townhouses and single family homes, had to deposit just 5%.

Prasert Taedullayasatit, chief business officer of Pruksa Real Estate Plc, said he would meet with the BoT on Friday. It was normal, he said, that the authorities will need more information from developers about market sentiment and the size of both supply and demand. This is better for the BoT before launching more measures to control the market.

Srettha Thavisin, president of Sansiri Plc, said he met with the BoT team last week and gave them market data, including the sizes of both supply and demand. The company also showed the team its market research studies. When the company goes into new locations it has to have the information to support its expansion plan.

“They asked if a drop in the loan-to-value ratio to 85% or 80% would impact the market. I said that it would impact directly on buyers of residences priced lower than 2mn baht because they do not have enough savings to make a down payment. This will not support low-income people in owning a home,” he said.

“In my view the property sector does not have a bubble ,” he said.

For example, Sansiri now limits sales to its customers. If they want to buy more than five units, the company will not sell them to them. This is one of the measures to reduce speculators in the market, he said.

Chatchai Payuhanaveechai, executive vice president of Kasikornbank, said that if the BoT does not want banks to offer a zero interest rate to customers, then K-Bank will follow that policy, because it is the responsibility of the central bank to manage the country’s risk.

“However, we believe that the property market now is different from 1997 because most property firms and commercial banks have restraints on launches and provide loans for customers based on credit scores.

“When we look in more detail we see fewer non-performing loans among mortgage loans than among other loans, so we believe that the real estate market now does not face a bubble. But we have to be careful in some locations,” he said.

The BoT will also talk with banks about their campaigns for home loans featuring a 0% interest rate as part of its annual visit to the executives of the banks.

Ruchukorn Siriyodhin, assistant governor for the Financial Institutions Policy Group, said banks can launch this kind of zero-rate campaign but they have to clearly inform prospective customers about the effective interest rates throughout the loan term to give them complete information for decision-making.

The central bank has been monitoring the banking industry and found that their lending has met the standards, and that their non-performing loans (NPLs) have not increased. Bankers said they have been informing home loan customers about the effective rates after the 0% rate ends. The central bank raised this concern to prod the banks into being more cautious about bubbles in the property sector, they said.

— The Nation

 

Want more Thailand news from the Thaiger family?

📱 Download our app on Android or iOS for instant updates on your mobile
📝️ Join the conversation on Thaiger Talk - discuss news & life in our Thailand forums
📧 Subscribe to our daily email newsletter
👍 Like/Follow us on Facebook
🔔 Subscribe to or Join our YouTube channel for daily video updates

image

Join the conversation and have your say on Thailand news published on The Thaiger.

Thaiger Talk is our new Thaiger Community where you can join the discussion on everything happening in Thailand right now.

Please note that articles are not posted to the forum instantly and can take up to 20 min before being visible. Click for more information and the Thaiger Talk Guidelines.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

Follow Thaiger by email:

Thailand10 hours ago

Thailand News Today | AoT warns about tourist exuberance, easing of restrictions | June 22

Coronavirus (Covid-19)11 hours ago

CCSA: Bars to stay closed for now, drunk customers risk the spread of Covid-19

Bangkok12 hours ago

Woman dies after jumping from Phra Khanong BTS station in Bangkok

Phuket Sandbox July 1st

days
hours
minutes
seconds

Thaiger is getting behind local businesses for the restart of tourism in July - up to 50% discounts across all advertising packages in June!

Coronavirus (Covid-19)12 hours ago

263 covid cases linked to canned seafood factory in Songkhla

Drugs12 hours ago

Narcotics Control Board announce recent drug busts, heroin and cocaine sent by mail

Environment13 hours ago

3 Cambodian activists arrested for plotting against the government/insulting the king after documenting waste run-off

Chiang Mai13 hours ago

Chiang Mai eases restrictions, alcohol now allowed at restaurants

Thailand13 hours ago

Angry ex allegedly sets motorcycle on fire in school parking garage

Cambodia14 hours ago

6 arrested in Cambodia for allegedly trafficking people into Thailand

Coronavirus (Covid-19)15 hours ago

Tuesday Covid Update: 4,059 new cases; provincial totals

Thailand15 hours ago

Power outages coming to Kathu

Coronavirus (Covid-19)15 hours ago

Samut Sakhon governor calls for more vaccine doses after order was cut

Thailand16 hours ago

Fruit buyer arrested for allegedly using counterfeit certificates to export durian

Tourism17 hours ago

Airports of Thailand president says tourism won’t pick back up until October

Thailand17 hours ago

Mobile sterilisation/vaccination truck helps Pattaya’s cats and dogs

Thailand4 months ago

Thailand News Today | Thai Airways in rehab, All go for Songkran | March 4

Tourism4 months ago

Phuket’s nightlife. Yes, bars and clubs are still open | VIDEO

Phuket4 months ago

Thailand News Today | Covid passport talks, Thai Airways heads to court | March 2

Tourism4 months ago

Phuket Thai food treats you need to try | VIDEO

Thailand4 months ago

Thailand News Today | Bars, pubs and restaurants ‘sort of’ back to normal | Feb 23

Tourism4 months ago

In search of Cat & Dog Cafés in Phuket Town | VIDEO

Thailand5 months ago

Thailand News Today | Gambling crackdown, Seafood market to reopen, Vlogger challenge | Jan 21

Thailand5 months ago

Thailand News Today | Covid testing for visas, Business impact, Vaccine approval | January 19

Thailand5 months ago

Thailand News Today | Weekend Bangkok bombs, Thailand fires, Covid update | January 18

Thailand5 months ago

Thailand News Today | Stray car on runway, Indonesian quake, 300 baht tourist fee | January 15

Thailand5 months ago

Thailand News Today | Governor off respirator, sex-trafficking arrest, condo prices falling | January 14

Thailand5 months ago

Thailand News Today | Chinese vaccine, Thailand ‘drug hub’, Covid update | January 13

Thailand5 months ago

Thailand News Today | Bangkok may ease restrictions, Phuket bar curfew, Vaccine roll out | January 12

Thailand5 months ago

Thailand News Today | Covid latest, Cockfights closed down, Bryde’s Whale beached | January 11

Thailand6 months ago

Thailand News Today | Southern floods, Face mask fines, Thai Air Asia woes | January 8

Trending