By Kitiphong Thaichareon BANGKOK, Nov 12 (Reuters) - The Bank of Thailand said on Friday it would set limits on bank lending for residential property to prevent a bubble emerging in the sector, sending property shares lower, but home builders expected little impact. Intensifying competition in the housing sector has led to riskier bank lending for property purchases, and although non-performing loans are low at the moment, they could go higher in the future, Deputy Governor Krirk Vanikkul said. "It is a preventive measure, not a solution. There's no bubble problem ... If we wait until we see signs of (a bubble), we have a problem, it will probably be too late," Krirk told a news conference. The loan-to-value ratio (LTV), the percentage of a property's value that can be given as a loan, for condominium units will be set at 90 percent from January 2011, Krirk said. The LTV for low-rise housing units will be set at 95 percent, effective January 2012, he added. The new rule will apply to housing units worth less than 10 million baht ($335,700), although government employees will escape this restriction, Krirk said. Bank lending to housing units worth less than 10 million baht ($335,700) accounts for 93 percent of total property loans. The measure sent the property sector sub-index on the stock market down nearly 3 percent at one point before it recovered. It ended down 0.65 percent, while shares in market leader Land & Houses ended down 0.75 percent. NOT SPECULATION Most developers expected only a small impact from the move. "Most of our buyers are at the middle-to-high level," Land & Houses Senior Executive Adisorn Thananun-narapool told Reuters. "Our projects are mostly detached houses and town houses, and demand in the market for them is not for speculation, unlike condominiums." Pruksa Real Estate, Thailand's second-largest developer, was also relaxed, while third-ranked Quality Houses said any effect would take time to show through. "Expensive houses won't be affected but it's still 'wait and see' for condominium buying," said Suwanna Buddhaprasart, Quality House's senior executive vice-president, noting the company had recently moved into building cheaper condominiums. KGI Securities analyst Thaninee Satirareungchai said: "Quality Houses sees no signs of a bubble or oversupply in the low-end condo market and believes competition in this segment is among the big developers whose financial positions are strong." Quality Houses and most other developers require 5-10 percent as a down-payment on sales in this segment, and commercial banks normally loan 90-100 percent of the housing prices for good name developers. Issara Boonyoung, president of the Housing Business Association, told Reuters the home loan limits were acceptable and should not affect sales of property companies. "We think this is reasonable and we agree with it," he said. ($1=29.79 baht) (Additional reporting by Saranya Suksomkij and Kochakorn Boonlai; Writing by Orathai Sriring and Ploy Ten Kate; Editing by Alan Raybould) ((firstname.lastname@example.org; +66 2 648 9729; Reuters Messaging: email@example.com)) Keywords: THAILAND PROPERTY/ (If you have a query or comment on this story, e-mail to firstname.lastname@example.org) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.
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