Thailand: No property stimulus in the pipeline

  • A property stimulus package is absent from the government’s plans because developers can adapt to changes such as the central bank’s loan-to-value (LTV) ratio requirements, which are deemed appropriate for the current circumstances, says Finance Minister Uttama Savanayana.
  • Regarding higher down payments for mortgages, Mr Uttama said developers have adapted to the LTV measures.
  • Starting from 1 Apr 19, homebuyers are required to make a minimum down payment for third and subsequent mortgages of 30% of the home price, with second mortgages set at 10%-20%, depending on how long a borrower has made payments on the first one.
  • The LTV ratio of 90-100% remains unchanged for those planning to buy a home priced below THB10mn, but the ratio is lowered to 80% when the borrower buys a residence valued at THB10mn or higher.
  • Pornarit Chounchaisit, president of the Thai Real Estate Association, said many residential developers have shifted to launching more low-rise housing like single detached houses, townhouses and duplex houses as condo activity plummeted in 1H19.
  • “Developers that keep launching new condo supply will find it more difficult, as the sales rate is not as good as expected and will result in a large amount of inventory,” Mr Pornarit said.
  • Poor sentiment in the housing market loomed in 2Q19 after the LTV curbs took effect on 1 Apr 19. The new rules had a strong impact on new housing sales in 2Q19.

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