Property developers believe the new government’s policies offering special financial packages for first-home buyers will create growth in the property market, but they are waiting to see what conditions might be imposed with the new deal.
In the election campaign just concluded, the winning Pheu Thai Party promised as part of its populist policies to offer mortgages free of interest for five years to first-home buyers purchasing a home worth less than Bt4 million. It said home-buyers would also get a tax allowance of Bt500,000 on mortgage repayments, instead of the current Bt100,000 allowance.
Business Housing Association president Issara Boonyong said the new-home buyer policy would have to be introduced after the government took office. The policy will help people to buy their first home by reducing their interest costs. At present, mortgage repayments average about Bt60,000 a year for a residence costing Bt1 million and Bt240,000 a year for a residence costing Bt4 million.
The campaign – when it becomes effective – will challenge home-buyers to purchase a residence and will boost growth of the property market, he said.
However, he is concerned about the campaign’s definition of a first-home buyer, because it may mean that many worthy recipients will miss out on its benefits. He explained that over the past 10 years some people had bought first homes for less than Bt1 million because, at that time, they had less money. However, because their families have grown, they now need bigger homes, but will miss out on the government’s financial package because they are technically not first-home buyers.
On the other hand, home-buyers whose salaries exceed Bt100,000 per month will still qualify for the package if they decide to buy a first home worth less than Bt4 million. In these circumstances, the new government’s policy will not be helping poor people to own their first homes.
“I hope the new government will consider the conditions of this incentive, and provide mortgages to serve the middle-income market, rather than rich people,” Issara said.
Thai Real Estate Association president Kittipol Pramoj na Ayudhya said that if the campaign was launched as promised, it would drive property-market growth. However, it was dependant upon whether the country’s overall economy grew.
Asian Property Development’s deputy chief financial officer Pumipat Sinacharoen said it was a matter of waiting to see whether conditions were attached to the new government’s promised policy. If there are no conditions and first-home buyers find it easy to get approval for mortgages, it will not only challenge them to buy a residence, it will prove to be beneficial for the entire property industry.
He said commercial banks would have to launch campaigns to boost their housing loans by focusing on residences priced over Bt4 million, so the government’s policy would be good for the entire market.
Kasikornbank’s first senior vice president Chartchai Payuhanaveechai said that if the new government launched a mortgage campaign according to its policy promises, it could effect the banks’ provision of housing loans. However, the banks will not lose face by launching campaigns to compete with the government’s programme. Rather, the banks will have others campaign to drive the market at prices over Bt4 million per unit to maintain their housing-loan levels, he said.
According to the Real Estate Information Centre (REIC), residences with prices not higher than Bt4 million represent about 70 per cent of the entire residential market, with a market value of about Bt200 billion per year.
Earlier, the REIC’s director-general Samma Kitsin said that demand for new homes fell by 20 per cent in June as buyers waited to see who would form the new government, and what special promotions might ensue.
However, most property developers say their revenue in the second quarter of this year has continued to grow because customers have been ready to accept the transfer of finished homes from residential projects without waiting to see what a new government might offer in terms of financial incentives.
“Our customers have continued to transfer from projects in the second quarter. There has been no delay,” Asian Property Development’s Pumipat said.
Source: The Nation
