THBA: Real Estate Sluggish, Home Building Grows Amid Loan Rejection Surge

MGR Online•Economy•17d ago

Reader Briefing

Despite a struggling real estate market in the first half of the year, the Thai home building sector has shown robust growth, driven by consumers seeking to mitigate risks associated with general contractors.

•The Thai real estate sector experienced significant slowdown in the first six months due to high household debt and reduced purchasing power, compounded by geopolitical issues affecting energy and material costs.
•Loan rejection rates in some regions have surged to 50-60%, the highest in a decade, impacting affordability for lower and mid-priced housing segments.
•The home building business (companies specializing in custom homes) has grown against the trend, attracting customers wary of general contractors' risks of project abandonment and budget overruns.
•More than 500 home builders are now operating, with big investors entering the market, increasing competition for general contractors.

Overview

•In the first six months of the year, the real estate sector experienced severe slowdown.
•The slowdown is attributed to high household debt, reduced purchasing power, and geopolitical issues driving up energy and construction material costs.
•Loan rejection rates in some regions have surged to 50-60% due to financial institutions' stricter lending practices to prevent non-performing loans (NPLs).
•The surge in loan rejections is affecting segments with housing prices below 3 million baht and is extending to the 3-5 million baht segment.
•The price of completed housing projects has increased due to new property valuations, exceeding the purchasing capacity of Gen Z.
•The Thai Home Builders Association (THBA) revealed that the home building business is growing strongly against the real estate market trend.
•Consumers are opting for professional home builders over general contractors to mitigate risks of project abandonment and budget overruns.
•Niran Pho-si, President of THBA, emphasized that financial discipline is crucial for businesses to survive in the current fragile economy.

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Key Quotes

Niran Pho-si

"Financial discipline is the key to survival amidst this fragile economic condition."

วินัยทางการเงินคือ กุญแจสำคัญในการอยู่รอด ท่ามกลางภาวะเศรษฐกิจที่เปราะบางเช่นนี้

Key Entities

Organization

Thai Home Builders Association(สมาคมไทยรับสร้างบ้าน)

The organization that released an analysis of the real estate and home building market.

THBA

Abbreviation for the Thai Home Builders Association, which released an analysis of the real estate and home building market.

Person

Niran Pho-si(นายนิรัญ โพธิ์ศรี)

President of the Thai Home Builders Association (THBA) who provided insights into the market and advice to businesses.

Gen Zℹ️

Demographic group defined as being unable to afford new housing due to rising prices.