The property market in Thailand has been tipped to grow by half as much as previously predicted.

The combination of rising oil prices and interest rates led Manon Pongsathat, president of the International Property Association, to suggest a five per cent increase in the overall property market this year, down from the ten per cent figure estimated earlier.

The number of new houses in Thailand will increase by 65,000 this year, which although less than the 68,000 units recorded last year, could still prove tempting to overseas property investors. Thailand is increasingly popular with foreign tourist, a key point on the Asian backpacking trail.

However, Mr Pongsathat sounded a note of caution, reminding buyers that interest rates could be even higher three years from now.

He told the Thai News Agency that potential buyers had to arrive at a realistic estimate of their ability to repay debt, while calling on the government to force banks to rein in their lending to prevent an "uncontrollable economic bubble".

Meanwhile, the Bangkok Post reports that a new property law will prevent Thai nationals from becoming involved in "nominee" companies set up for foreign purchases unless they have actually invested.

Foreigners are unable to purchase property in Thailand directly, although a nominee company may be used if it is majority Thai-owned.

The new regulation will force all foreign-owned companies to prove their source of funding before purchasing land, possibly impacting on Thailand's overseas property market.

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    Carol McDonald