Trinity Securities Company Limited stated in the analysis that The performance of the real estate sector in the fourth quarter of 2022 is expected to grow compared to the previous quarter. And compared to the same period last year from the high backlog, both low-rise projects that have been phased in during the 11 months of 2022 as well as newly completed condominiums ready for relocation. AP, SIRI, LH and SPALI are expected to continue to perform well.
Pre-sales and transfers in Q4 2022 are expected to come from higher demand after various measures end on Dec. 31, 2022, such as the undoing of LTV easing measures as the BOT believes Thailand’s economy has slowed. recovery is clearer and more complete. while the real estate sector tends to continue to improve both the demand and supply sides which will return to using the original lending criteria
Therefore, the cancellation of these measures is expected to have a positive effect on sales and transfers in the fourth quarter of 2022 to keep pace with the same criteria. But it will be negative for housing market sentiment from 2023 onwards, as in the period from 20 Oct 21 to 31 Dec 22 the LTV measure is relaxed, allowing 100% home lending for all price levels and all contracts AND returning to the same measures, will affect sales and transfers from the year 23 onwards.
Because the buyer must be ready in a more financial position. Because it can borrow at a ratio of 100% to 70%-90% for house prices above 10 million baht and groups with more than 1 mortgage deal from developers with houses priced at 2-5 million. affected due to highly credit dependent and high rejection groups (including LPN and PSH).
However, we believe developers with a high percentage of cash customers and high-end customers will have lower rejection rates and be less affected by LTV waiver reversal. We expect around 7 new project launches in 4Q22. Ten billion baht, the percentage of low-rise projects at 75% and condominiums at 25%
for the launch of a new project in 2022 Since the last AREA report of the month of November 22, 382 new real estate projects have been started, with an increase of 3% compared to the same period last year. The total number of units sold was 116,701 units, an increase of 25% over the same period last year. And the value of the project increased by 58.238 million baht, a growth of 21% compared to the same period last year.
launching a new project in November 2022 they have the main proportion (By the number of units) in the price range of 1-2 million baht, there are 6,635 units (40%), and the second is in the price range of 2-3 million baht, with 4,506 units (27%), but the group with the initial sales value. The highest was the group priced above 5 million baht with a project value of 15,504 million baht or the 31% of the total value of new properties launched this month. But there’s a sales rate or acceptance rate that’s been weakening since Oct. ’22
However, REIC information predicts that in 2022, there will be new housing launches in the metropolitan area alone of about 96,803 units worth 508,264 million baht, an increase of 87.9% over the same period last year. and by 132.1% over the same period last year according to respectively, divided into horizontal residential projects of 49,492 units worth 336,008 million baht and condominium projects of 47,311 units worth 172,256 million baht and is expected that there will be approximately 373,253 transfers of residential property worth 997,471 million baht, an increase of 8.59% over the period and 5.61% over the same period a year earlier, respectively, representing the divestment of 279,447 units of horizontal projects and the disposal of condominium property of 93,806 units.
As for the year 66, the positive and negative factors were mixed. Transfers and net income from the real estate sector are expected to continue to grow. But it is growing at a slower pace than in 2022 due to several factors depressing the overall market, including:
1. Cancellation of LTV relief measures which should influence the loan decision From the second loan agreement onwards it can be borrowed at 70-90% from the original which could borrow 100% during the relief measures.
2. According to the resolution of the Cabinet of December 20, 2022, the property transfer registration fee was reduced from 2% to 1%, which was previously reduced to 0.01%, resulting in a burden on developers and customers. Expenses increased slightly, however, the real estate mortgage registration tax was still reduced from 1 percent to 0.01 percent (only for the simultaneous assignment and mortgage).
For residential purchases, including single, semi-detached, townhouses, commercial buildings and condominiums (both first-hand and second-hand), only with a purchase price and appraisal price not exceeding 3 million baht and the amount of the loan not exceeding 3 million baht per contract. This does not include the case of the sale of parts only from the effective date of the law until December 31, 2023.
3. Rising interest rates Affects the interest burden on home loans, putting pressure on purchasing power and demand for home purchases, and a higher cost of debt, affecting developer profitability .
4. Inflation and higher minimum wages Resulting in higher construction costs, putting pressure on gross margin.
5. Backlog of condominium projects has decreased compared to the same period last year Because in the past 3 years, each developer has launched fewer new condominium projects than the historical average, while ANAN and QH have not launched any new condominium projects. As a result, the condos are recently completed and ready to move into in 2023.
Positive factors promote growth
1. According to the Cabinet resolution of December 20, 2022, the tax rate was reduced by 15 percent of the calculated tax amount. For FY 2023 land tax collection which will help reduce the cost burden for both buyers and developers who have a land bank waiting to be developed.
2. The return of foreigners will help boost purchases in groups of condominiums whose demand has disappeared for 3 years.
3. New Project Launches in 2023 Expected to Grow with Single Digit AP, SIRI and SPALI are expected to launch new projects more aggressively than the group because they have been able to increase their market share over the past 3 years.
4. The use of pricing and promotions to increase sales and transfers is expected to decrease relative to 64-65 year-olds, resulting in higher margins.
Real estate stocks are currently trading at an average P/E of 8.5x, which is 10x lower than the unbiased average. Selective buying is recommended by developers with profit growth. And keep making new highs, namely AP (Thailand) Public Company Limited or AP, Sansiri Public Company Limited or SIRI, and developers with good dividend payouts, namely Land and Houses Public Company Limited.) or LH and Supalai Public Company Limited or SPALI
