THE Covid19 outbreak will lead to a fall in the price index for housing supply in Greater Bangkok in the first quarter, with discounts and campaigns still necessary to clear inventory.
Real Estate Information Center (REIC) acting director-general Vichai Viratkapan said property developers need to use promotions to boost sales in the first quarter as the new wave affected consumer confidence and purchasing power.
He made the statement in the wake of a survey by the Real Estate Information Center (REIC) about the impact of Covid19 on the housing market in Bangkok.
“Pressure for discounts and campaigns will come from new residential supply that will be completed this year,” he told local media.
According to a survey by REIC on housing supply in Greater Bangkok in mid-2020, the number of residential units that remain unsold or were under construction totalled 62,388 units, comprising 27,907 low-rise houses and 34,481 condos.
Some of this number will be gradually added as new inventory this year amid unfavourable sentiment, said Mr Vichai.
“Developers will continue offering discounts and campaigns as an extension of the land and building tax reduction, which will help them cut cost, while appraisal prices will remain unchanged or see no increase,” he said.
Campaigns can also be launched together with the government’s property measures, a cut of transfer and mortgage fees that might be extended this year after expiry last year, to cover units priced 3 million baht and above.
Mr Vichai said developers’ promotions and government measures can stimulate purchasing power in the property market as homebuyers can buy a unit at a lower price and save expenses on transfers.
However, the campaigns may contribute to a fall in the price index of residential supply available for sale in Greater Bangkok for consecutive quarters in the first quarter this year.
In the fourth quarter last year, the price index of new low-rise houses in Greater Bangkok saw a consecutive drop to 127.8 from 128.1 in the third quarter.
The price index of condos saw a consecutive fall from the first quarter of 2020 at 153.4, down from 153.8 in the fourth quarter of 2019.
“The condo segment dropped on the price index for four consecutive quarters,” he said.
“The fourth-quarter index was also the first time with a year-on-year decline, down 1.2%.”
Mr Vichai said this suggested condo prices had slowed down consecutively from lower demand among both Thai and foreign buyers, while there is too much supply available for sale.
The price index of single detached houses was 126 in the fourth quarter, down from 126.4, 126.6 and 126.7 in the third, second and first quarters, respectively.
The first quarter was also a peak since 2012, the year REIC started its price index survey.
For townhouses, the peak was in the same period as single detached houses, and the fall was the third consecutive since the second quarter of 2020.
Most campaigns for low-rise houses in the fourth quarter last year included free electric appliances and furniture, which accounted for 41.6%, followed by a cut of expenses on transfer dates or a waiver of common area expenses (33%) and cash discounts (25.4%).
Meanwhile, cash discounts accounted for 43.8% of condo campaigns, followed by free items (38.4%) and a cut in expenses on transfer date (17.8%).
Top: Night view of Bangkok from Benjakiti Park. Photo: Kizamaya (CC BY 2.0)