The sentiment of housing developers for the next six months declined in the third quarter, with the most significant drop relating to employment concerns after the government announced a minimum daily wage of 400 baht next year.
Vichai Viratkapan, acting-director general of the Real Estate Information Center (REIC), said the sentiment index for the next six months dropped to 60.1 in the third quarter this year from 62.1 in the previous quarter.
“The index remained above the median of 50.0, indicating developers maintained a positive outlook on the overall property market for the next six months,” he said.
Of the six issues that the REIC addressed in its survey of listed and non-listed developers, employment recorded the most significant decrease, dropping from 62.1 in the second quarter to 56.8 in the third quarter.
Songkran Issara, chief executive of SET-listed developer Charn Issara Development, said the policy to increase the minimum daily wage would have an impact on the overall economy.
“The impact of wage hike will be large because the economy hasn’t yet grown robustly or gained sufficient momentum to support the push for new costs, which will result in increased labour costs for business owners,” said Mr Songkran.
He added that the country’s economy had shown signs of recovery from the impact of the Covid-19 pandemic, largely due to the resurgence of the tourism sector. However, globally sentiment remained unfavourable.
“There are ongoing risks, both domestically and internationally, that raise concerns. One particular worry is various conflicts and disputes, as the situation between Ukraine and Russia has somewhat calmed, yet fresh tensions have erupted between Israel and Palestine,” he said.
According to the REIC, the second-largest drop in the expectations index was performance which decreased from 69.4 to 65.0.
Investment declined from 68.8 to 65.7, while the launch of new projects or new phases fell from 70.5 to 69.5, and sales decreased from 69.7 to 69.5.
“Only the expectations index on costs rose, with an increase of 2.1 points. It suggests that developers could achieve greater cost reductions than in the second quarter,” said Mr Vichai.
The REIC also reported housing developers’ sentiment index on the current situation, which edged up to 49.7 in the third quarter, from 47.5 in the second quarter, but declined from 51.8 in the third quarter of 2022.
“The index was below the median of 50.0 for three consecutive quarters of this year, mainly due to interest rates being hiked five times from 1.25% to 2.50% in the third quarter,” said Mr Vichai.
Only the current situation index on employment and the launch of new projects or new phases reached above 50.0, while those regarding performance, employment, cost and the launch of new projects or phases picked up from the second quarter.