B3m incentive cap deemed too low
text size

B3m incentive cap deemed too low

The government should extend property incentives to cover residential units priced above 3 million baht to help the property market as foreign demand has dropped, says the Real Estate Information Center.

The centre's acting director-general Vichai Viratkapan said the property market, particularly condos, cannot rely on sales to foreign buyers.

"Sales volume from foreigners has decreased from 2016-17, when condos were very popular among Chinese buyers," he said.

Last year the proportion of foreign buyers in condo transfer nationwide dropped to 6.8% from 9.9% in 2019 and 10.1% in 2018.

In 2020, condos nationwide transferred to foreigners declined by 35.3% to 8,285 units worth a combined 37.7 billion baht, down by 25.5%, from 12,798 units worth a total of 50.6 billion in 2019.

Last year sales continued to drop from the peak in 2018, when 13,568 units worth a total of 57.3 billion baht were sold.

Transfers in each year were largely from sales a few years earlier as Chinese buyers preferred off-plan condo units.

"The positive impact and momentum from the Elite Card programme is still in question," said Mr Vichai. "Rather than relying on foreign purchases, we should boost domestic demand through incentives."

The property measures the government gave a nod to last month to extend another year would continue to be for units priced lower than 3 million baht.

The measures included a cut of transfer and mortgage fees to 0.01% from 2% and 1%, respectively.

According to the centre, the total number of residential units transferred nationwide decreased by 8.5% to 358,496 units last year, but transfer value dropped only 0.3% to 928.37 billion baht.

Of the total low-rise housing transfer, 31% were units priced lower than 1 million baht, 14% each were priced between 1-1.5 million and 1.5-2 million, and 20% were units priced between 2-3 million.

In total, units priced lower than 3 million baht accounted for 79%.

Units priced 3-5 million baht accounted for 14%, suggesting that if the measures cover units priced up to 5 million baht, 93% of units would be covered by the benefits.

Mr Vichai said the new outbreak and the expiration of the previous measures on Dec 31 will impact housing transfers in the first quarter, with the number expected to decline by 10.6% from the same quarter last year.

The transfers will resume in the second quarter with year-on-year growth of 7.5% as the same period last year saw dismal activity, he said.

By year-end, housing transfers nationwide are forecast to drop 1.5% from 2020 to 353,236 units under the base-case scenario.

The largest decline will be in the condo segment, with a decrease of 4.2%, while low-rise houses will have a drop of only 0.1%.

Do you like the content of this article?