Limited launches help second homes

Despite political unrest and the economic slowdown, Bangkok's second-hand home market continues to grow but only in specific locations, led by the inner city and those along the Purple Line.

While overall housing demand is strong, new supply launched by developers is tending to decline in unit numbers after many decided to cut back on new projects this year.

Voradet Sivatachanon, president of property brokerage franchise firm ERA Franchise (Thailand) Co, said the limited number of new units will boost demand in the second-hand home sector, which remains strong every year.

Market growth this year will be higher than the usual 10-15%. The three main factors influencing demand are the world economy, Thai economy and mortgage releases.

"This year many financial institutions have set a higher target for new home loan releases, while the world economy is recovering. The only negative factor is Thailand's economic slowdown, so the second-hand home market will remain good," Mr Voradet said.

The top location will be the inner city, where resale condos are the most popular because they are much cheaper than newly launched condos and low-rise units.

It will be followed by locations along the Purple Line in Bang Bua Thong and Bang Yai, where homebuyers seek townhouses priced 1-3 million baht.

The third most popular location will be Ram Intra Road-Min Buri, driven by a newly completed transport network and the prospect of a new mass transit line.

Visit Kunatharakul, managing director of property broker Realty World Alliance Co, said second-hand home market growth will be in specific locations, particularly those where new houses are limited.

In an economic slowdown, single houses priced 5-10 million baht get a big impact as prospective buyers in this segment already own a house and can slow down their decisions.

Meanwhile, the resale condo segment remains strong as new units have higher prices, pushed by higher development and land costs.

Last year second-hand market growth was driven by the condo segment with unit prices of 1-4 million baht, which accounted for 60%. It was followed by townhouses (40%) as there were a limited number of newly launched townhouses.

However, Somsak Muneepeerakul, president of the Real Estate Broker Association, said political problems will have a negative impact on the second-hand home market as buyers will delay making decisions.

Last year the market grew by 10-15% and this year will be sluggish if political problems prolong until business slows down in the first and second quarters of the year.

Mr Somsak said brokers need to work hard as annual demand for second-hand homes is only 25% of the total supply, with demand for 70,000 to 80,000 units compared with a supply of 300,000 to 350,000 units.

"As Asean integration will be effective next year, if there is an act to control the brokerage business, it will help build confidence among consumers and strengthen the second-hand market as a whole," Mr Somsak said.

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