Bangkok growth set to slow on oversupply

The value of new housing projects in the Thai capital rose 64 per cent in the first half of this year from a year earlier when business was hit by political unrest that led to an army coup in May last year, a leading property consultant said.

But the pace was likely to slow in the second half, with full-year growth expected at 30 per cent due to fear of oversupply in some segments, Sopon Pornchokchai, president of the Agency for Real Estate Affairs said on July 23.

Although the economy "is not getting any better, expensive housing is booming because those with higher incomes are not affected by an economic crisis at the moment", Sopon said.

New projects were worth 227 billion baht (HK$50 billion) in January-June and were expected to rise to 449 billion baht for the full year, helped by demand from wealthy buyers, he said.

He said cheap condominiums were booming due to speculative purchases and demand from lower income people unable to afford expensive housing.

With the economy slowing, and consumer confidence shaky, already launched projects may be left unsold, Sopon said.

"There are fears of bubbles in detached homes over 10 million and condominiums of less than one million baht," he said.

Thailand's economy grew only 0.9 per cent last year, with the political crisis bringing it to the brink of recession in the first half. The central bank recently cut its 2015 economic growth forecast to 3 per cent from 3.8 per cent, due to weak exports and subdued domestic demand.

Consumption, which accounts for half of gross domestic product, is only slowly picking up, curbed by high household debt levels.