REIC urges state to cut transfer fees

With property sales expected to shrink by 5-7% this year, the government should trim transfer fees for properties to stimulate consumer demand, says GH Bank’s Real Estate Information Center (REIC).

The measure is needed because overall property sales during the first six months saw a continuous decline, with a concurrent rise in unsold units, said REIC director-general Wichai Viratakaphan.

“There are concerns over the large number of unsold condo units, which is a burden for developers,” Mr Wichai said. “Sales of horizontal houses priced between 2 and 5 million baht continue to be seen.”

At the 553 condo projects in metropolitan Bangkok during the first half, there were 64,969 unsold units valued at a combined 265.3 billion baht, up 38.4% year-on-year, according to the REIC.

Total unsold properties amounted to 152,149 units at 1,670 projects, with a combined value of 669.7 billion baht.

“The Eastern Economic Corridor project has induced property sales in Chon Buri and Rayong provinces to improve, but sales in Chachoengsao remain lacklustre,” Mr Wichai said.

If a property stimulus measure is not implemented, the tepid property market will continue throughout the second half, resulting in a 5-7% contraction this year, he said. The malaise is set to continue into 2020, he added.

Thailand’s stagnant property market is a result of a slowdown in the global economy and the domestic economy, homebuyers’ hesitancy over long-term debt obligation, effects from the Bank of Thailand’s stricter loan-to-value (LTV) measures, as well as the baht’s appreciation causing a decline in foreign homebuyers’ purchasing power, especially for those from China, Mr Wichai said.

Although the LTV measure led to a 20-30% fall in second-home purchases, the policy is needed for long-term benefits, he said.

The LTV measure requires a minimum down payment for third and subsequent mortgages of 30% of the home price, while the minimum down payment for a second housing loan is 10-20%, depending on how long a borrower has made payments on the first.

An LTV ratio of 80% is required in cases where a borrower buys a residence valued at 10 million baht or higher.