The recently approved property stimulus measures should help the Thai stock market as they significantly lower costs for homebuyers, with the cuts to transfer and mortgage fees applying to up to 70% of the units available in the property market.
The measures approved by the cabinet this week apply to homes priced up to 7 million baht, which comprise 50-70% of the property market, expanding from a price limit of 3 million baht, which covered only 15-20% of the market, according to brokerages.
Therdsak Thaveeteeratham, executive vice-president of Asia Plus Securities (ASPS), said he believes the measures will increase sales among listed property companies.
The cabinet agreed to cut transfer and mortgage fees from 2% and 1% respectively to 0.01% for first and second homes priced up to 7 million baht, as well as offering an income tax deduction of up to 100,000 baht for home construction costs.
According to ASPS, the transfer and mortgage fee reductions will trim the cost of home purchases by 19,850 baht for every 1 million baht of home price. The transfer fee was 2%, or 20,000 baht (1% or 10,000 baht for buyers and 1% or 10,000 baht for sellers).
Cutting the transfer fee to 0.01%, or 0.005% for each party, reduces the cost for buyers by 9,950 baht per 1 million baht of home price. Reducing the mortgage fee from 1% to 0.01% trims the amount for buyers by up to 9,900 baht for a 100% loan.
These cuts can reduce costs for a first home worth 5 million baht (mortgage of 100% of the value) by 99,250 baht. For a home priced 7 million baht, the reductions save home-buyers 138,950 baht.
"The fee cuts for homes priced up to 7 million baht benefit SET-listed property plays because most of their units are in this price range," said Mr Therdsak.
This should boost sales revenue from 2023 year-end backlogs of 205 billion baht, with 113 billion ready for transfer in 2024, and inventories worth almost 800 billion, including 126 billion baht in ready-for-transfer condos, he said.
ASPS said investors need to watch whether more measures will be approved: easing of loan-to-value limits, which was recently rejected by the Bank of Thailand; a one-year land and building tax cut of 50%; revision of homeownership regulations for foreigners, extending from 30 to 60 years; and high loan rejection rates from banks.
Kasikorn Securities concurred that property stimulus measures produced positive sentiment for stocks in this sector.
"Loan rejection rates from financial institutions are high," said the brokerage.
"Reducing transfer and mortgage fees is considered the most concrete and tangible measure granted to the sector."
Kasikorn Research Center said the measures should drive property transfers for the last nine months of this year, producing a decline of only 1.6% in 2024 compared with the previous year.
Without these measures, the dip would be 3.6% this year, noted the unit.