PROPERTY / MARKET OUTLOOK

Optimism for house contractors

Pent-up demand about to be realised

KANANA KATHARANGSIPORN

Despite uncertainty on the political and economic front, the home-building market in the first half of the year is expected to remain strong, as customers who have delayed decisions since last year are unlikely to wait much longer for conditions to improve, according to the Home Builders Association (HBA).

The home-building market has been less affected by the slowdown than the overall residential market because people who want to build their own houses usually have high savings discipline and prefer to spend cash rather than obtain loans, said Sitthiporn Suwannasut, the HBA secretary-general.

These customers have delayed their decisions since last year to see whether the situation will improve. But they are unlikely to wait much longer.

Many contacted home builders in the first quarter of the year, reflecting the fact that the customers have real demand but have chosen to move cautiously.

According to the HBA, the home-building market was valued at 1.7 billion baht in the first quarter, up from 1.6 billion baht in the same period last year.

Mr Sitthiporn said home building was now a buyers' market. Customers generally have high purchasing power so builders need to improve the standards of their products and services.

''Home builders may face difficulties if they have no information on construction-material and management costs and cannot anticipate risks from rising oil prices,'' he said.

Meanwhile, those who cut prices to boost their sales without regard to the impact on the overall industry might destroy the image of the home-building business and consumers' trust in the business. ''And finally, we would not be different from [small individual] contractors, as in the past.''

He suggested that consumers should be cautious and select a professional builder since building a house was a big investment with high risks. Making decisions based on prices alone without seriously considering the firms' records or experience might result in the customers having to pay more eventually.

When market conditions are not favourable, home builders should expand to new markets rather than resort to pricing, he added. Such markets include large provinces with high levels of investment, tourist destinations and industrial provinces where there is demand for professional home-building services.

''If they [home builders] remain in the central market, the market value will not increase much. Their market and opportunities will shrink and they will face higher competition and risks,'' he said.

According to an HBA survey, houses in developed estates are not popular in the provinces where 90% of the people build houses on their own plots.

Bangkok Post

Monday April 09, 2007