Sentiment among housing developers in Greater Bangkok dropped in the first quarter this year as they were worried about soaring costs of construction materials impacted by the Russia-Ukraine war.
Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC), said the sentiment index of housing developers on the current situation was 47.1 in the first quarter of 2022, down from 52 in the fourth quarter last year.
"Their sentiment just improved in the fourth quarter of 2021 from below the median of 50 which was seen in 10 consecutive quarters from the second quarter of 2019 to the third quarter of 2021," he said. "An index below 50 means they are not confident."
The main reason for the lower confidence was the Russia-Ukraine conflict which had a strong impact on the price of fuel and many construction materials, particularly steel which saw a year-on-year rise of 35% in prices, he said.
Other problems that worried developers in the first quarter this year included a shortage of workers in the construction sector, higher inflation and an increase in interest rates.
According to REIC, the sentiment index for development costs was the lowest at 32 in the first quarter of 2022, down from 39.6 in the fourth quarter last year. It was followed by new project launches at 45.1, down from 55, and revenue at 45.4, down from 53.3.
Among six issues, which also included sales, investment and employment (besides development costs, new project launches and revenue), the only one which saw a rising index was employment at 53.6, up from 53.4.
Overall listed developers had much higher confidence than non-listed firms at 51.1 and 41.1, respectively, despite both dropping from 56.3 and 45.5, respectively, in the fourth quarter of 2021.
However, listed developers' confidence regarding development costs was the only issue which was lower than non-listed developers at 31.7 and 32.6, down from 40.3 and 38.5, respectively.
The expectations index for both listed and non-listed developers, which reflects sentiment for the next six months, was 56.5 in the first quarter this year, down from 62 in the fourth quarter last year.
All of the six issues saw a drop in the expectations index. Like the current situation index, the lowest was development costs at 24.3, down from 26.5. Others were above 50.
The highest expectations index was sales at 68.2, followed by investment at 65.7. However, that of listed firms was investment at 73.3 while that of non-listed firms was sales at 63.
While the quarter-on-quarter drop in the indices in the first quarter this year was mainly from supply, the quarter-on-quarter rise in the fourth quarter last year was entirely from demand.
Mr Vichai said positive factors boosting residential demand in the fourth quarter of 2021 included relaxed loan-to-value limits, the country's reopening and the extension of the property incentive for another year.
