An aerial view of a flood-ravaged residential area in Nakhon Phanom province. Lower flood risk since last month has increased consumer confidence. PATTANAPONG SRIPIACHAI
The homebuilding market should improve in the fourth quarter, driven by economic growth and clear signs of a roadmap for the general election in February, says the Thai Home Builders Association (THBA).
Association president Sitthiporn Suwannasut said the self-built home market should improve in the fourth quarter because the government has said a general election is planned for February.
"This boosts consumer confidence," he said. "People are more confident about spending on a daily basis as well as investing in residential units."
THBA estimates the value of the self-built home market nationwide this year will total 130-150 billion baht. Of this amount, the homebuilding business should capture 14-15 billion baht.
In the first nine months, the homebuilding business accounted for 70% or around 10 billion baht, slightly below expectations.
However, the market in the fourth quarter is expected to bounce back and meet expectations.
"Demand and purchasing power in the late third quarter resumed after a slowdown dampened by seasonal fluctuation and natural disasters," said Mr Sitthiporn.
"People delayed buying decisions as many regions, particularly the North, the Northeast and parts of the South faced heavy rains that caused floods and landslides."
In the third quarter this year, the self-built home market was steady, generating the same growth rate as in the second quarter.
A negative factor that weakened purchasing power was political uncertainty, he said.
There was a significant slowdown in July and August as low purchasing power delayed decision-making, with potential buyers taking a wait-and-see approach on the economy and political situation.
Positive momentum returned after the flood risk waned in September, yet recovery in the self-built home market was not that strong, said Mr Sitthiporn.
"People in the North and Northeast will not build homes during Buddhist lent, which is in the third quarter. They will do it in the fourth quarter," he said.
Competition in the self-built home market in the first nine months was high, said Mr Sitthiporn. In Greater Bangkok and major provinces, competition was varied between price brackets.
For units priced up to 2 million baht, competition was very high, largely among small and new home builders as well as individual contractors. They competed on price rather than quality.
For units priced between 2-5 million baht, competition was also high among small, medium and large homebuilders. These companies focused on design and function, quality of materials and craftsmanship, using marketing strategies to boost sales, he said.
Homebuilders offering units priced 5-10 million baht rarely compete on price, differentiating themselves on function and design, material quality and value-added features such as energy-saving homes, construction technology and additional home equipment like home automation.
Competition was high for units priced 10 million baht and above, as homebuilders competed to grab market share amid limited demand, said Mr Sitthiporn.