The recently approved Baan Dee Mee Down, a 50,000-baht cash rebate programme, is unlikely to help boost the country's property market much because the impact will be limited and fleeting, says the Thailand Development Research Institute.
Nonarit Bisonyabut, the TDRI's senior research fellow, said only limited segments will benefit from the programme because of the criteria and conditions.
According to the Baan Dee Mee Down scheme, homebuyers who receive a cash rebate of 50,000 baht must have a monthly income of no more than 100,000 baht or 1.2 million baht a year and must be taxpayers in the Revenue Department's tax database.
The programme is limited to the first 100,000 participants who meet the Finance Ministry's criteria, apply for a mortgage loan between Nov 27, 2019 and March 31, 2020 and register between Dec 11, 2019 and March 31, 2020.
"Rather than from the government, the giveaway [cash rebate] should be offered by developers themselves in the form of price reductions or heavy discounts," Mr Nonarit said.
"We don't think the programme can work," he said. "If it could, why don't developers offer it themselves. Despite a property market slowdown, they continue to perform well. They still post profits, albeit lower profits."
Surapol Opasatien, chief executive of the National Credit Bureau, agreed with the TDRI, saying developers should reduce prices heavily to attract buyers if they want to drain their huge supply.
"Among the many business risks is a regulatory risk, which developers should take into account," he said.
Kamolpat Swaengkit, country manager of property portal website DDproperty.com, said Baan Dee Mee Down can help boost market sentiment, but in practice the process may be difficult because there are many steps to obtain the privilege.
"The programme will not create a new market, as those who want to buy a house will buy anyway and those who do not want to will not," she said. "For long-term results, the programme's time frame should be extended."
To boost the property market, Mr Nonarit suggested the government focus on overall economic expansion, infrastructure development and Eastern Economic Corridor initiatives (EEC).
"The high-speed train may fail if the EEC does not happen," he said.
He said the government should focus on long-term development like mass transit lines and transport networks to help jump-start the property sector, as the impact from the tax incentives is short-lived.
If economic growth is lower than 3.7%, property market growth will be 1.5-3% because population growth in the future will trend downwards, with a decrease of 0.57% per year projected for people aged 20-60 years old.
"To boost the property market, we may need to rely on foreign demand, but that raises security concerns because foreigners have high purchasing power, making property prices soar," Mr Nonarit said.
Household debt is a key factor weakening residential demand, he said. Many people are unable to get a mortgage loan because they have high debt.
"There is an oversupply in the condo market," Mr Nonarit said. "Those with high purchasing power and the ability to pay a mortgage, such as baby boomers, don't prefer condos, while target buyers have high debt."
Risky segments include first-jobbers who spend heavily day-to-day and those earning 30,000 baht or less per month who have debts.