Plus Survey Determines Houses and Townhomes to Remain the Dominant Market in Q4-2020
26 Oct 2020
plus news and update
- Plus Property expects the real estate market to continue on present trends, in the final quarter of 2020. Detached houses and townhomes are expected to drive the market for the remainder of the year.
- Locations with good prospects include New Krungthep Kreetha and Bang Na – with their connectivity to the EEC – as well as the Ram Intra area and locations on the rim of the Outer Ring Road which have access to the expressway system and future rapid transit stations.
- Government urged to supply ‘strong medicine’ to stimulate the market in the final quarter, such as expanding the reduction of transfer fee and mortgage fee to 0.01% to all price ranges, and additional tax incentives for homebuyers.
Ms. Suwannee Mahanarongchai, Deputy Managing Director, Business Strategies and Asset Management, Plus Property Company Limited, the full-service professional property and facility management agency, disclosed that findings from surveys by Plus Property’s research and development division have led to an expectation for the property market to remain unaltered in the 4th quarter of 2020, when compared to the entire year.
The economic slowdown resulting from the spread of COVID-19 in the first half of 2020, coupled with the tightening of mortgage approval criteria since 2019, have prompted property developers of both horizontal and vertical projects to adjust their business plans.
Plans to proceed with new projects were pushed back as developers shifted to the rapid release of the unsold supply within the market in order to maintain their businesses’ liquidity, employing price competition in the first half of the year.
Moreover, there is currently a tendency for competition within the horizontal project market to intensify. This is especially true of markets for properties at the medium price level such as townhomes, where developers have taken notice of consumers’ diminishing purchasing power as the economic downturn reverberates.
Developers have found a need to invent products that were of lower prices in order to command greater access to buyers. Therefore, we will likely be seeing the presentation of more products targeted at the horizontal project market towards the end of this year.
The overall property market experienced a decline in sales during the first half of the year. In the detached houses category, supply on offer amounted to 14,082 units – a decline of 8%. Total demand amounted to 5,115 units – a decline of 4%. Consequently, the selling ratio was 36%.
The townhomes category had 31,211 units of supply on offer – a decline of 6%. Demand totalled 12,248 units, which was down by 18% from the same period of the previous year. The resultant selling ratio was 39%.
Meanwhile, the condominiums category experienced an 8% decline in supply on offer, which was 104,094 units. Demand fell by 28% as only 17,074 units were sold; the selling ratio was just 16%. These figures point to horizontal developments having garnered better reception than high-rise properties.
“The horizontal market is viewed as being the driving factor for the sector in the remainder of this year, and this is true for both detached houses and townhomes. Developers are expected to increasingly launch projects that respond to the real demand group.
Meanwhile, townhomes are expected to experience the purchasing power of consumers who have switched their intended purchase from condominiums to horizontal properties, because of lifestyle changes in the aftermath of the COVID-19 outbreak.
These properties are also receiving windfall from the several rapid transit system that will commence service at the end of the year and make transport interconnections more convenient.
A locality that stands out and is worth keeping an eye on is the New Krungthep Kreetha area (Srinagarindra - Rom Klao Rd.), as this is a newly opened-up area with roads providing commuting links to the Ramkhamhaeng and Rama 9 locales. Moreover, travel to Suvarnabhumi airport is quick and convenient.
The Bang Na area is another location of interest, as it is receiving positive support from the Eastern Economic Corridor (EEC) project. Also of note are the Ram Intra area, localities served by the rapid transit extensions as well as those on the rims of the Outer Ring Road, all of which allow convenient travel into the city via expressways.
“Nevertheless, any assistance measure received by the property market within the final quarter of this year would likely lend to economic activity and income distribution. Measures to prop up purchasing power or alleviate the buyers’ burdens would have significant positive effects on the market.
An example would be expanding the reduction of property transfer fee and mortgage registration fee to 0.01%, to cover all price ranges instead of the current limitation to properties priced no more than 3 million baht.
Any special fixed-interest measure offering higher credit would expand access to mortgages. Tax incentives similar to the first-time home buyers campaign should also help encourage purchase decisions by consumers at large”, said Suwannee.
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