Despite the Bank of Thailand telling commercial banks to lend no more than 90% of a property’s value to condominium buyers next year, Sena Development Plc is working with a local bank to create a lending package that still comes close to 100%.
Kessara Thanyalakpark, Sena’s executive director, said the central bank’s curb will affect low- and middle-income buyers who until the end of this year could borrow the full purchase price on the transfer of a unit plus a little more.
Customers have normally paid a 10% down payment during the construction period, followed later by the other 90% plus about 4% for the sinking fund, common area expenses and transfer fees. After receiving the full package amount, they usually had 6% left over.
“This has helped to push condominium sales in the past, especially in the low-end and medium markets. But we’ve discussed this with a local bank and promised it a certain loan level, so we can help structure the package to offer almost 100% lending in the end,” said Dr Kessara.
She expressed no surprise at the central bank’s decision to increase the policy rate to 2%, saying it is consistent with earlier measures capping home loan size and the loan-to-value ratio in order to curb a possible bubble in the property market.
The core of the matter will be the reaction of commercial banks, whether they will increase their rates, said Dr Kessara. If a bank lifts its rate by 0.25%, a homebuyer’s instalment payments will rise by about 3%.
“I think any effect from higher interest will not be immediate,” she said. “The loan-to-value cap is producing more of an impact, as only people with savings can buy a home.”
With the outlook for the condominium market so unfavourable next year, Sena Development will maintain product variety including low-rises, condominiums and rental properties.
It plans eight new projects next year – three low-rise housing developments, four condominiums and a rental project.
Sena now has 14 active projects with a remaining sales value of 3.45 billion baht.
The company is targeting 20% revenue growth next year from an expected 1.5 billion baht this year. For the first nine months of this year, it achieved revenue of 833 million baht, down by 14.6% year-on-year.
However, the sales backlog is worth 1.29 billion baht, mainly condominiums. Sena is thus confident of achieving its revenue target, as three condo projects will be delivered in this quarter.
Shares of Sena closed yesterday on the Stock Exchange of Thailand unchanged at 2.08 baht in trade worth 785,000 baht.