Thailand Housing Market Takes Beating On Consumer Gloom

Source: AFP

With consumers feeling gloomy over the outlook of post-coup Thailand, the kingdom's nearly six- billion-dollar housing market has shrunk for the first time since 2000, industry experts say. "People are delaying buying property due to a lack of confidence in the economy and politics," said Atip Bijanonda, president of the Thai Condominium Association.

Sales in the residential property market, worth 200 billion baht (5.8 billion dollars), dropped by 10 billion baht in the four months to April this year, marking the first decline since 2000, the association said. The figure has rattled the industry, which saw demand nosediving during the 1997 Asian financial crisis. Atip said he expected more bad news with Thai consumer confidence stuck at a five-year low.

"The market may have negative growth this year," he said. To shore up housing demand, the military-installed government, which came to power after a coup in September 2006, is expected to launch measures aimed at reviving the property sector, including tax cuts.
Pimonwan Mahujchariyavong, a property analyst at Kasikorn Research Center, said consumers were putting off buying property as they awaited a further cut in the key interest rate. "Consumers are expecting gains from falling interest rates and they are waiting for the rate to go down further," Pimonwan said.

The Bank of Thailand slashed its key interest rate by a half- point to 3.5 per cent last week in a bid to spur sluggish consumer spending and the slowing economy.
It was the fourth rate cut this year but business leaders called on the central bank to lower the rate more aggressively in an effort to stimulate the economy, which is seen rising 3.8-4.8 per cent this year. If growth was just 3.8 per cent in 2007, it would mark the lowest increase since 2001, when Thailand's gross domestic product (GDP) expanded 2.2 per cent.

With flagging finances and political uncertainty under the military government, the number of new housing projects has fallen as some 90,000 houses and condos remain unsold in the market, said Pimonwan. "The property market has slumped significantly since the beginning of this year because of shrinking confidence in the economy among developers as well as consumers," she said.