ASEAN property market takes a hit as people delay buying a home
Half of Thai consumers decide to put off buying and selling property for the time being.
The governments of many ASEAN countries have taken measures to stimulate their economies over the past few months in the hope of building up confidence among consumers and encouraging them to spend. But slow growth and insecurities about the future are putting many off laying out their hard-earned savings on purchases, especially on major items like cars and houses. This reticence is having a major effect on the property market across the region.
The World Bank‘s “Global Economic Prospects” report shows that the economic outlook for the East Asia and the Pacific in the short term remains highly uncertain as a result of the COVID-19 pandemic. Even if the pandemic subsides, the economic damage from last year’s recessions could prove deeper and more durable than expected. “Consumer and business confidence may be even slower to recover, resulting in more protracted weakness in domestic demand,” the report notes.
The real estate sector in ASEAN continues to be affected. This is because purchasing a property is a long-term financial burden especially when consumers are facing challenges from an economic slowdown and the pandemic. Understandably, all except the very rich are sticking to strict financial planning and postponing their real estate purchase plans.
The effect on the purchasing power of people in the region will continue, Thailand’s leading real estate marketplace website DDproperty predicts. However, along with the regional PropertyGuru Group websites in Singapore, Malaysia and Indonesia, DDproperty points out that despite the decline in purchasing power of ASEAN consumers due to the Covid-19 outbreak, they foresee that housing demand will grow in the future mainly because of the aspirations of millennials and Gen Y. Millennials in Singapore, Malaysia, Indonesia and Thailand will continue to focus on home savings next year at 69%, 59%, 77%, and 59% respectively.
Thais are dissatisfied with the housing market
A sluggish economy makes Thais among the most dissatisfied consumers when it comes to the property market, which is the lowest in ASEAN. The satisfaction level was rated at 66% in 2019 but has now dropped to only 48%. The main reason is the economic slowdown.
The survey by DDproperty confirms that the slowdown is the main reason why Thais are dissatisfied with the housing market. Consumers also think the property market is unstable and can’t find the type of residence they want within their budget.
The results of a recent Consumer Opinion Survey on the current housing markets in the four major ASEAN members reveals that economic growth and the government’s real estate stimulus measures are key factors in purchasing decisions in this challenging time. On the upside, the arrival of Covid-19 vaccines could potentially trigger a rise in consumer confidence.
Singapore, Indonesia and Malaysia have already started vaccinations against COVID-19 while Thailand, despite the arrival of vaccines, is still preparing to give jabs. The date when the inoculation programme will start is not yet clear and this inevitably affects consumer confidence when it comes to spending.
The significant findings of the regional survey by the websites are that 60% of Singapore consumers intend to buy their own home within two years. At the moment, 39% of wanna-be-home owners don’t have sufficient down payments. The majority of Singaporeans (49%)
expect the government to intervene with a down payment reduction measure. This is unlike their ASEAN counterparts whose nationals want the government to help cut mortgage interest rates.
About half of Malaysians (52%) say they don’t have enough for the down payment. And most of them want additional measures by the government to help reduce interest rates. In Indonesia, 85% of consumers want the government to help curb the interest rates. About half of them (52%) have had to postpone the purchase of properties due to the pandemic.
The same goes for Thai consumers, with 56% deciding to delay property purchases and rentals during this time due to the impacts of the epidemic. Thai home buyers look at the size and space of residences first, followed by convenience when deciding to buy a property.
The top reason given by Thais for purchasing a new home is a demand for private space. However, 60% of Thais view that the main obstacle when applying for a real estate loan comes from career instability and income. More than half (52%) hope the government will introduce additional measures to cut the interest on home loans. The most popular locations are Ratchada, Lat Phrao and Rama IX.