The residential property market will continue to face a number of challenges in 2019. These include a fragile economic recovery in Thailand, weak purchasing power, especially of low-income earners and high levels of housing inventory. Given this, KResearch has conducted a survey on the behavior of Bangkok residents toward home purchases so as to find out demand over the next 1-2 years. The poll attaches importance to the LTV measure because it is a challenge factor for 2019 that may affect home buying decision of Bangkok residents.
The survey shows that the respondents, who already own homes and want to buy new ones, as well as being affected by the LTV measure, account for 34 percent of the total respondents. When this group of respondents is combined with those, who have not owned any home and wish to buy new homes with a price tag of THB10 million and higher, they account for about of 2 percent of the total respondents. Therefore, those affected by the LTV measure account for 36 percent of the total respondents. However, if those, who may have no obligations over mortgage loans, are excluded, the respondents affected by the LTV measure then account for about 18-22 percent of the total new mortgage loans extended each year (based on Bank of Thailand's data). As a result, we at KResearch have assessed that the LTV measure may affect about 18,000-22,000 borrowers of new mortgage loans, meaning that such borrowers may have to set aside cash at 11-22 times of their income after expenses have been deducted, compared to about 5-11 times before the implementation of LTV measure.
As prospective local home buyers have to consider more factors and the fact that purchasing power of foreign nationals for condominiums will unlikely accelerate any time soon amid the slowing global economy and murky domestic market, KResearch projects that the number of residential ownership transfers in Greater Bangkok may reach only 169,300-177,000, shrinking 8.5-12.5 percent, attributable partly to the high number of completely built residential units in 2018 and marketing efforts by property developers to release the high levels of housing inventory prior to the enforcement of LTV measure.