Developers in Northern Thailand a bracing for a huge slump in the residential property market as home buyers become fewer and fewer. Furthermore banks are imposing stricter rules on home buyers and denying mortgages.
Prat Wongwan, president of the Chiang Mai Real Estate Association, said the economic slowdown and lower confidence among home buyers will lead to a continued drop in the property market.
“More than half of Chiang Mai’s GDP is from the tourism industry, which is stumbling,” Mr Prat said. “Many job seekers today are those who used to work in the hotel business.”
He said housing sales and transfers in northern Thailand slowed last year because of the US-China trade war. Many Chinese buyers were unable to get units transferred as moving funds from China to Thailand became more difficult.
Home buyers mortgages rejected
Yotsawat Rungkhanawuti, president of the Phitsanulok Real Estate Association, said his province will see a market slowdown this year. Due to lower purchasing power and weaker demand in line with other markets nationwide.
“As the virus spread in Thailand, some home buyers browsed housing projects online and decided to make purchases,” Mr Yotsawat said. “Many of them were rejected for mortgages. Above all because banks have become more cautious than before the pandemic.”
Vichai Viratkapan, acting director- general of the Real Estate Information Center (REIC), said the absorption rate of residential supply in Chiang Mai for all types of residences will face a big drop from 2.5-4.2% per month in 2019 to 1.1-1.6% this year.
“Housing Developers should be more wary of launching new supply this year. Especially as market sentiment will be unfavorable due to the pandemic. Also a large volume of unsold housing developments remain,” Mr Vichai said.
The REIC predicts that unsold supply in Chiang Mai will rise to 9,343 units by the end of 2020. Higher than the five-year average of 8,694 units and up from 9,149 units worth 35.42 billion baht as of the end of 2019.
Houses stop selling in Chiang Rai
Of the 2019 amount, 2,615 units worth 10.7 billion baht were completed and ready to transfer. The number of residential units being transferred in Chiang Mai this year is estimated at 12,156 units. Worth 23.14 billion baht, down 7.9% and 14.6% respectively from 2019.
The figure will mark consecutive decreases since 2018 and the lowest level in five years, Mr Vichai said.
In Chiang Rai, total supply soared to 3,009 units in the second half of 2019. From 1,927 units in the first half, as newly launched supply and unsold units was large. Nearly 98% consisted of low-rise houses.
Mr Vichai said homebuyers’ purchasing power in Chiang Rai was lower in the second half of 2019. Indicated by sales pivoting from single detached houses to townhouses, according to the Bangkok Post.