Tough times for the residential property market in Udon Thani and Khon Kaen will continue into 2019 amid an expected poor economy and the Bank of Thailand's new requirements on mortgage lending, say local developers.
Natthawat Suansujarit, director of the Udonthani Real Estate Association, said the central bank's new lending rules will have an impact on homebuyers in Udon Thani, as many of them buy a unit as a second home when they relocate to work in the province.
"A second mortgage lending contract is usual in a key province like Udon Thani, as there are always people moving to Udon Thani to work," Mr Natthawat said yesterday at a seminar on the northeastern residential market held by the Real Estate Information Center.
He suggested that developers adjust their sales and construction plans, slowing launches or expanding with new phases at large-scale sites.
Those that carry a large amount of housing stock should speed up sales, Mr Natthawat said. To boost sales and close projects faster, they could agree to taking a lower profit.
Some SET-listed developers are reducing prices to boost sales. For example, Land & Houses and Supalai are offering discounts to 3.8 million baht for single houses priced at 4.3-4.4 million baht.
In the condo segment, unit prices at some projects from listed or large developers were discounted to 900,000 baht from 1.5 million baht during the launch period, as those units were completed and ready to transfer and developers wanted to move as many as possible.
Mr Natthawat said developers should shift to off-plan houses to extend the down payment period for homebuyers, instead of ready-to-transfer houses.
Developers could also manage or reduce costs, develop working systems and prepare people to cope with future situations.
"Udon Thani has good logistics and sufficient hospitals and facilities, but the problems in the residential sector are the banks' mortgage lending rejections and new town plans," Mr Natthawat said. "These will continue in 2019."
Channarong Buristrakul, president of the Khon Kaen Real Estate Association, said the housing market in Khon Kaen will be more difficult next year because of the central bank's macroprudential policy.
"The Bank of Thailand is controlling state-owned banks," he said. "But a bigger issue is the weak purchasing power of local demand, which gets affected by the poor economy and decreasing income."
Khon Kaen is anticipating new development of infrastructure projects like double-track rail, which will improve logistics in the province.
The airport is expanding and light rail transit was approved.
"The government plans to develop many infrastructure projects in Khon Kaen, but they are not building income to stimulate people to buy a house," Mr Channarong said.
Narathorn Taninpitak, vice-president of the Korat Real Estate Association, said the economic situation, the central bank's stricter rules on mortgage lending, higher costs and new town plans are negative factors that will continue next year.
"New infrastructure projects will boost the housing market in Nakhon Ratchasima, as they will draw in new investment and industrial estates," he said. "Housing demand is from local people, first-jobbers and frequent visitors."
