As many analysts continue to trim their expectations for Thailand’s macro-economic outlook over the next 12-18 months, the Thai government is considering a broad menu of financial stimuli to combat slowing growth.
One of the measures under consideration is designed to help the residential property sector, and this includes a reduction in the ownership transfer fee of freehold real estate – from 2.00 percent to 0.01 percent of a property’s assessed value – and to reduce the mortgage registration fee from 1.00 percent to 0.01 percent of the value of the loan for a period of six months.
Though the measure will be for a short term, it is a welcome step that will benefit Thailand’s housing sector, particularly Bangkok’s softening condominium market according to real estate firm JLL.
Suphin Mechuchep, Managing Director of JLL, said: “Although the proposed short-term measure is unlikely to help boost new demand in the residential market, it should help incentivise home buyers to accelerate a home transfer process.
“Residential projects where construction will not be completed within six-month will not benefit from the stimulus measure as units in these projects will not be ready for transfer before the measure expires,” Suphin explained.
“In addition although the ownership transfer and mortgage registration fees collectively account for about 40 percent of the typical transaction costs for residential real estate in Thailand, they do not represent a significant proportion of the total transaction value.
“Therefore the reduction in these fees may not be impactful enough to encourage less serious prospective buyers to make a purchase decision faster,” she added.
She added the measure will benefit completed housing estates and condominium developments with a backlog of units that are ready for transfer, and residential projects whose construction will complete soon.
“Prospective buyers who are seriously considering purchases of units in these residential projects should make a purchase decision faster to take advantage of the stimulus measure,” said Suphin.
“The policies as proposed represent a safe step towards helping the softening residential sector.
“Increased housing transfer activity should help boost developers’ financial strength and enable them to invest in new projects – private investment that Thailand needs to help drive its macroeconomic growth,” Suphin said.
“Having said that, the approval process of the policies must be quick. After the proposed policy was publicised, prospective purchasers have adopted a wait-and-see approach, postponing their purchase decision in hope of the launch of the stimulus measure,” she concluded.