New Year, new start! …Despite the celebratory optimism that usually accompanies the start of a new year, property investors will have to grapple with some new realities in 2019!
Market conditions have shifted, especially when compared to last year early-2018; with headwinds and volatility in the horizon, smart money will need to tread carefully.
Knowledge is power, especially in Bangkok’s slowing real estate market. Therefore, understanding what will make the market move, is key to making winning bets in the uncertain year ahead!
Here are 3 Economic Factors to Watch in 2019:
1. Tighter Lending & Interest Rate Increase
The exuberant residential boom and rapid hike in condos and home prices in Bangkok, has inevitably raised concerns at the Bank of Thailand (BoT). Cautious, the regulator has raised its concerns about the excessive debt-fuelled growth of Developers and speculative attitude of local home buyers.
Therefore in an attempt to rein-in on the industry’s advance, the BoT has imposed curbs on mortgage lending. These restrictions will aim to limit property loan approvals, severely restricting 2nd home buyers. These new measures will be effective as from the 1st of April 2019.
On top of this, the BoT intent on stabilizing the market has approved a marginal increase of the policy interest rate to 1.75% up from 1.50%.
2. Thai Election & Market Uncertainty
At the time of this article’s publication, the Thai elections that were initially scheduled for the 24th of February have been postponed. This hot-button topic has deep political and economic significance for Thailand and it’s Capital.
However no matter “when or how” the elections take place, the primary concern of the Bangkok’s real estate industry will be a continuation of stability and a peaceful economic and political environment.
3. The Global Economy, China and Tariff Man
A slowing rate of Global Economic Growth is predicted for this coming year; with even the BoT reviewing 2019 projected growth for Thailand to 4% from 4.2% previously. While reasons behind this slowdown are complex, many are quick to point to one leading cause- “trade protectionism led-by cooling US-China Relations”.
On a local level, this uncertain outlook especially weakening growth in China could hit industries such as Thai Tourism particularly hard. This would have adverse effects on investor confidence and general market performance.
The big question, will Tariff Man strike again? …
When the Macro looks uncertain, focus on the Micro!
The macro-economic headwinds that the Bangkok property market will face in 2019, can easily encourage investors to stick their heads in the sand.
While this might not be a bad strategy, as the saying goes “In the midst of every crisis, lies great opportunity”!
Our advice is to diligently focus on micro-economic factors, carefully selecting popular Bangkok neighborhoods, in good quality projects, at an attractive (Highly discounted) sales price. This diligence will undoubtedly reap fruits and allow investors to weather the storm ahead!