REIC upbeat on impact of latest property tax perks
Predicting 2.4% inventory clearance
The recent property tax incentives are expected to help drain housing inventory by 2.4% in the final two months of the year, with the addition of 6,200 units being sold nationwide, says the Real Estate Information Center (REIC).
Vichai Viratkapan, the centre's acting director-general, said the amount of housing inventory in Greater Bangkok and 26 major provinces will decline to 257,969 units by the end of the year with the help of the incentives.
"With the incentives, it can reduce by 4.5% from 270,131 units in the first half," Mr Vichai said. "Without them, it might decrease by only 2.2% to 264,197 units."
He said an additional 6,200 units are likely to be sold and transferred in the November-December period this year as the property incentives stimulate some homebuyers to make decisions.
The property tax incentives include a cut of transfer and mortgage fees to 0.01% from 2% and 1% respectively for units valued at 3 million baht or less. They are effective from Nov 2, 2019 to Dec 24, 2020.
Of the 6,200 additional units expected to sell in the final two months, 4,800 will be in 26 major provinces and 1,400 will be in Greater Bangkok. Most housing units in the provinces are priced below 3 million baht.
In Greater Bangkok, the amount of housing inventory that had construction completed totalled 95,462 units at the end of the first half. Of this amount, 48,465 units or 50.7% were priced at 3 million baht or less.
The total completed unsold units priced at 3 million baht or less in Greater Bangkok comprised 17,592 low-rise houses, single detached houses, duplex houses and townhouses and 30,873 condo units.
Mr Vichai said the amount of housing inventory nationwide will continue to drop by 9.9% to 245,371 units in the first half of 2020 and fall by 15.2% to 225,976 units in the second half of 2020.
The major reduction will be in the low-rise segment, with declines of 11% and 17.5% respectively for the same periods.
"To reduce the inventory, developers should focus on boosting sales of ready-to-transfer units and not launch too much new supply next year," Mr Vichai said.
The REIC estimates the amount of new residential supply launched in Greater Bangkok this year at 112,044 units, down 23.2%.
Low-rise and condo supply is to drop by 24.4% and 22.4% respectively to 46,010 and 66,034 units.
For 2020, the REIC forecasts the amount of new residential supply being launched to total 113,000-125,000 units, up 1.4-11.5% from 2019.
Low-rise will increase by 5.9-16.5% to 48,000-54,000 units, while condo will either drop 1.7% or rise 8.2% to 65,000-71,000 units.