Despite an expected decrease in the loan-to-value (LTV) ratio of mortgages, new condo supply in Bangkok in the fourth quarter will continue as planned.
Phattarachai Taweewong, senior manager at Colliers' research department, said developers in the condo segment are not worried about the Bank of Thailand's proposed LTV limits and will continue with their fourth-quarter launches.
"Developers are waiting for clarity as the new measures are just a guideline and the central bank is reviewing recommendations," he said.
"We did not see any condo projects launched after the new LTV was announced [on Oct 4] asking for a 20% down payment. The rate was still 10%."
Mr Phattarachai said the new condo supply being launched in Bangkok in the fourth quarter will total around 16,000 units, the same as developers planned earlier in the year.
"The new LTV limits will affect new supply being launched next year," he said.
According to Colliers' market research, there were 22,579 condo units launched in the third quarter in Greater Bangkok from 46 projects worth a combined 107.54 billion baht.
The amount of new supply in the third quarter this year rose by 20% from the same period last year and jumped by 165% from the second quarter, the highest in a quarter since the past decade.
Despite positive trends in the economy in the first three quarters this year, purchasing power in the condo market was flat. There were around 36,000 condo units remaining in the market, from many developers.
"Developers need to grow every quarter. They cannot slow down launches to boost sales of inventory. They need to introduce different designs, functions and facilities to attract buyers," said Mr Phattarachai.
He said many developers are targeting foreign buyers. The majority of foreign buyers were Chinese. They were interested in locations along Sukhumvit and Ratchadaphisek roads in business areas.
Many projects gained interest from foreign buyers, while some developers launched new condo projects to foreigners before Thai buyers, said Mr Phattarachai. As a result, the foreign quota of 49% of the project was already full at many projects.
The average sales rate of new supply launched in the third quarter was 64%, while that of all new supply launched from 2015 to the second quarter this year was 81%.
He said some projects situated in good locations were sold out in a few days after launching, but others had under 50% of units sold. This was mainly because of location and price, not the economy or purchasing power, said Mr Phattarachai.
The University of the Thai Chamber of Commerce's Center for Economic and Business Forecasting reported the confidence index for new home purchases as of August was 74.7, the highest in 43 months.
Colliers reported only 3,086 units or 13.7% of the total new supply launched in Bangkok in the third quarter this year was located in inner Bangkok.
The majority of the supply was in locations along existing mass transit lines where developers could offer sales prices of 70,000-140,000 baht per square metre, which Bangkok residents could afford.
The average sales price of new supply launched in the third quarter was 137,933 baht per sq m, up 26.4% from the second quarter, as 53% of new supply was in locations along the current mass transit lines where condo prices rose 15-20% per year.
In the segment priced under 100,000 baht per sq m, new condo supply launched in the third quarter saw a price rise of 11% from the second quarter and an increase of 8.6% from the same period last year.
Listed developers continued dominating the Bangkok condo market as 76% or 87 billion baht launched in the third quarter this year were from listed firms.
Some 45% were located along the Green, Blue and Orange lines that are under construction.
"Bangkok's condo market will continue growing in the future in locations along future mass transit lines," said Mr Phattarachai.
"While Thai demand is limited and being replaced by foreigners, developers should be more cautious as foreigners are investment buyers."