The Bank of Thailand is now less concerned about a bubble in the condominium market due to a reduction in oversupply and a slowdown in demand. The impact of its decision to raise the loan-to-value (LTV) ratio, which took effect from the beginning of 2011, is being monitored.

It is too soon to assess the impact of the new LTV ratio but oversupply is much less, easing concerns of a bubble, said BOT senior director Mathee Supapongse.

Last year, the central bank announced a preventive measure by raising the LTV for condominium purchases. For condominium units costing less than Bt10 million, the LTV is capped at 90 per cent, which means loan cannot be more than 90 per cent of unit cost.

With Thailand's economy growing at a fast pace, and high consumer confidence, the transfer of property rights in Bangkok and its vicinity increased to 178,128 units in 2010 from 161,240 a year earlier.

The property market has started to give better signal, reflecting lower demand, said BOT director Songtum Pinto. The number of residential units getting credit approvals from commercial banks is projected to decline for all types to 5,793 in January from 9,067 units a month ago, the BOT’s Economic Conditions Report in January said.

via Property market returning to normal.