To study consumer homebuying behavior and demand, KASIKORN RESEARCH CENTER (KResearch) conducted a survey to analyze the current situation in the real estate market. The survey investigated demand for housing, categorized by design type and other factors influencing buying decisions of consumers at each stage of life. Aside from this, the survey sought homebuyers' opinions toward the escrow account, a procedure that will help enhance confidence toward homebuying. The survey, entitled “Behavior toward Buying Homes”, was conducted February 15-21, 2010, using a sampling group of 600 career people in Bangkok who are seeking or deciding to buy a home.
The findings show that the majority of Bangkok residents seeking to buy new homes prefer completed housing. Categorized by property type, the majority of homebuyers indicated a preference for detached, single-family houses, followed by the popularity of condominiums and townhouses.
It is noticeable that 70.9 percent of all homebuyers that were queried expressed the intention to buy an already completed home, but expressed some concerns about the financial stability of project owners. Therefore, project owners may place some significance on escrow account system to enhance consumer confidence, using this procedure as a selling point for their properties on sale and in future projects.
After the expiration of government real estate incentives, housing developers may raise prices in line with higher construction costs. KResearch views that higher pricing amid tough competition, plus an unsatisfactory economic recovery hampered by political uncertainty and a fragile global economic recovery, may affect the sales of some projects. Thus, well-organized marketing plans will be needed to attract homebuyers, because the vast variety in the market will induce homebuyers to compare project strengths and weaknesses more thoroughly. For intense competition between large developments in some locations, developers who do not adjust the price of their housing project will likely seize larger market shares because the expiration of real estate incentives has increased costs for developers, as well as increasing cost burdens for buyers.
KResearch views that although developers will be pressured by higher operating costs, the majority will increase their prices only slightly amid the current highly competitive real estate market. We expect that they will lean toward the following strategies:
- Cost Reductions
Developers will seek to maintain their profit margins by cutting back on some of the costlier marketing inducements.
- Housing Unit Adjustments
They may also reduce the size of future housing units, while maintaining the quality and pricing of their properties at appropriate levels to remain competitive.
- Market Research
They should earnestly study market demand, particularly in locales where intense competition exists, so that they can devise strengths, and advantages in their housing projects that will differentiate them from rivals.
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