The government has issued measures to stimulate the market to grow by 10%

The first quarter of 2024 is almost over, but there is still no real estate stimulus measure from the government. Additionally, we were disappointed when the Bank of Thailand (BoT) refused to relax the mortgage loan supervision rules (Loan-to-Value: LTV) temporarily for 2024. However, the President of the Thai Condominium Association recently hinted that there will be clarity in the second quarter, with the BOI piloting a promotion of investment in houses and condos priced at no more than 1.5 million.
 
Peeraphong Charoon-ek, President of the Thai Condominium Association, discussed the progress of eight measures to stimulate real estate, which have been submitted to Prime Minister Settha Thavisin. He mentioned that many matters are under consideration according to the procedures. It is expected that some measures will not need to enter the Cabinet and may be implemented first. The most prominent issue is supporting the ownership of a first home for low-income people, with the Office of the Board of Investment (BOI) promoting houses and condos not exceeding 1.5 million baht, up from the original 1.2 million baht. Applications for investment promotion to build these projects will be open soon.

As for the other measures in progress, we are waiting for the government or the Prime Minister to make an announcement. It won't be long. It is expected that in the second quarter, these measures will take effect from the middle of the year until the end of the year. The first half of the measures might be implemented sooner, while the remaining half may take more time because they must be brought into the Cabinet and follow the necessary steps, which will take at least another 3-4 months.
 
However, the LTV measure, which allows financial institutions to lend on second homes in excess of 100% of the appraised value, is no longer available. There is news from the Prime Minister and the Governor of the Bank of Thailand (BoT) that they have sent a letter to the Real Estate Association stating that they have not yet granted a waiver.

As for the issue of land and building taxes, 100% has already been collected and was paid last year. The association is still advocating for a 50% reduction for one year because the economy has not yet recovered.
 
In addition, the requested measures include considering a review of the rules and laws related to the ownership of residences by foreigners. This includes extending the lease term from 30 years to 60 years by defining the lease as a property right, and reviewing the BOI's criteria regarding foreigners being able to purchase housing. Other measures include offering a 10-year long-term visa for housing purchases of 10 million baht or more and a 5-year midterm visa for housing purchases of 5 million baht or more.
And the reduction of transfer fees to 1% and mortgage fees to 0.01%, which has been extended until December 31, 2024, with a request to adjust the criteria for the value of housing purchases from not exceeding 3 million baht to not exceeding 5-7 million baht. Alternatively, a reduction on the first 3 million baht is requested to stimulate spending by those with purchasing power higher than 3 million baht for both newly built and second-hand homes.

Peeraphong stated that this year, the market should grow because the government has set a GDP growth target of 3%, a number that can potentially stimulate real estate by up to 10%, especially after the disappointment of last year, when GDP grew less than 2%. If measures are taken quickly, it will significantly boost market growth. With the first quarter of 2024 drawing to a close, prompt action is crucial to ensure a high growth trajectory. If the measures are indeed implemented in the second half of the year, their impact should be felt in the fourth quarter of 2024. However, if not, it might be postponed to 2025.
 
Additionally, there are positive factors such as the recovery of tourism and the provision of free Chinese visas. The real estate market is experiencing a 10% growth from ownership transfers. Particularly, the condo market is beginning to recover, with sales on the rise. Regarding the current condo stock, the absorption period is 24 months.

As for the trend of Chinese customers entering the market, it has increased beyond the usual levels, as they have historically been the primary customers purchasing property in Thailand. However, their activity was delayed during COVID-19. Nowadays, they are beginning to return due to real estate challenges in China, leading them to turn to investment opportunities in Thailand instead. Additionally, there are new buyers emerging, such as Taiwan, which is now among the top five, Myanmar in the top ten, and Russia, steadily rising to the top three.
 
Ponnaris Chuanchaisit, President of the Thai Real Estate Association, stated that the issue of interest rates must wait for the BoT to send a signal. He believes that it's prudent to wait and observe the Fed's actions first. Rushing to reduce interest rates could potentially lead to problems, with money flowing out and affecting the stock market. However, during this period, there has been an influx of tourists due to the weakened currency. Nonetheless, it must be acknowledged that high interest rates do impact home payments, especially for new borrowers.
 
As for foreign investment in electric cars, it has generated excitement in the Eastern Economic Corridor (EEC) zone. However, many factories have significantly reduced their production capacity due to unfavorable conditions in world trade. Consequently, factory employees in Chonburi and Sriracha are experiencing reduced overtime (OT) fees, making it quite challenging to sell houses in Chonburi.
"Currently, for housing priced below 3 million baht, the number of loan rejections has increased by 50%, and the purchase volume has declined by more than half."
 
Credit by: https://www.bangkokbiznews.com/property/1118883