Connect with us


Phuket Property: Central bank fears bubble



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


Get more from The Thaiger

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.

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

Follow Thaiger by email:

Crime3 hours ago

Court issues arrest warrant for Sia B’s father, the ‘real owner’ of Mountain B

Thailand3 hours ago

Thailand News Today | Tourism minister joins Full Moon Party on Koh PhaNgan

World4 hours ago

Monkeypox variants renamed to avoid offending people

Sponsored12 hours ago

British International School Phuket: Reflecting on 25 years of world-class education

Tourism4 hours ago

Thailand ranks as fourth most popular destination among Chinese travellers

Crime4 hours ago

Thailand sentences musician to 6 years for royal defamation

Central Thailand5 hours ago

Thai doctor slaps a 3 year old for swearing & refuses to treat him

Join the conversation on the Thaiger Talk forums today!
Thailand5 hours ago

Thailand records fifth case of monkeypox in Thai woman

Guides5 hours ago

Why you should visit a wellness retreat in Thailand

Thailand6 hours ago

Govt take a trip to the shroom to help Thailand’s depressed

Chiang Mai6 hours ago

E. coli contamination found at popular waterfall in Chiang Mai, northern Thailand

Travel6 hours ago

Impressive beachfront hotels to book in Phuket

Crime6 hours ago

Thai temple man charged with murder of alleged would-be robber

Travel6 hours ago

5 incredible beaches in Phuket to visit in 2022

Travel6 hours ago

Board game cafes in Bangkok to unleash your competitive streak

Cannabis6 hours ago

Cannabis is illegal on Khao San Road, officials call for crackdown

Thailand11 months ago

Morning Top Stories Thailand | Police to end protests, Human Trafficking | September 14

Thailand1 year ago

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

Tourism1 year ago

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

Phuket1 year ago

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

Tourism1 year ago

Phuket Thai food treats you need to try | VIDEO

Thailand1 year ago

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

Tourism1 year ago

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

Thailand2 years ago

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

Thailand2 years ago

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

Thailand2 years ago

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

Thailand2 years ago

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

Thailand2 years ago

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

Thailand2 years ago

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

Thailand2 years ago

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

Thailand2 years ago

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