In 1H20, indicators for the housing market in Greater Bangkok have declined in line with the business environment. New home purchases fell by approximately 75 percent YoY on average during 5M20 while the number of home ownership transfers dropped 3.4 percent YoY, due to a number of factors. These include the coronavirus (COVID-19) pandemic, which has disrupted economic activities and marketing plans of the residential business. In addition, the decision of Thai consumers to buy homes has already been pressured by weak purchasing power, the LTV measure, as well as land and building law.
Looking into the remainder of 2020, KResearch views that home purchases may improve over those seen during 1H20 because domestic economic activities are projected to recover gradually. Moreover, there are some positive factors seen in the residential market, such as reductions in home ownership transfer fees and mortgage fees for homes costing less than THB3 million Baht (scheduled to expire on December 24, 2020), as well as proactive marketing campaigns by residential developers. This may, therefore, present opportunities for those who are ready to purchase homes. However, because of a broad-based economic impact on the business sector and household purchasing power, new home purchases in Greater Bangkok may not resume growth in 2020. It is expected that 62,000-67,000 units of new homes will be purchased in 2020, shrinking 37.9-32.9 percent YoY.
Amid the current sluggishness seen in home demand, many residential developers have scaled back their investment pending the economic recovery. Although sagging home demand may hurt their operating results over the short term, it will help correct the demand-supply balance and stabilize their home inventories amid supply glut in the residential market. For 2020, it is expected that approximately 68,000 -72,000 units of new homes will be built in Greater Bangkok, declining 42.8-39.5 percent YoY.