Thai property prices head south, government urged to support foreign buyers with incentives
The coronavirus pandemic has had a substantially negative impact on the Thai real estate market, particularly on the residential segment geared at foreign buyers.
According to a new survey by real estate and property research firm Juwai IQI, sales of residential property sales have declined dramatically in 2020 and promotional price reductions have reached up to 50%.
At the same time, banks are rejecting twice as many mortgage applications as in the past, which mainly affects local buyers as foreigners are normally not eligible for loans from Thai banks. As a result, the supply of condominium units in Bangkok and other popular locations is increasing, driving prices further down south.
The survey by Juwai IQI suggests that average new home prices in Thailand will decline by 3.9 per cent in the coming 12 months, while the forecast for used homes is worse, with average prices to decline by 6.7 per cent in the same period.
Residential rentals are expected to fall by 6.9 per cent over the next 12 months, before climbing again by an estimated 1.2% by the third quarter of 2022.
Lower transfer fees, quota changes suggested
Property developers, which are understandably nervous about the situation and are desperate to clear stock, have asked the Thai government for support. Proposals are to introduce incentives for foreign buyers, for example by allowing them to bid for residential units.
There are also suggestions to prevent an oversupply of property by increasing the 49 per cent foreign ownership quota in condominium buildings to 60 to 70 per cent in areas where unsold units exceed demand. The government should also increase the leasehold period on low-rise houses or villas from 30 years to 30 years plus 30 years of secure ownership, or 50 years in one registration, according to property lobby groups.
In the Juwai IQI survey, industry partners also proposed to reduce the special business tax and transfer fee for property transactions from 3.3 per cent and two per cent, respectively, to 0.01 per cent.
Another idea is to link a property purchase worth a certain base price – suggested is five million baht – to a long-stay visa and work permit, a policy that works well in a number of developed countries.
The coronavirus pandemic has had a substantially negative impact on the Thai real estate market, particularly on the residential segment geared at foreign buyers. According to a new survey by real estate and property research firm Juwai IQI, sales of residential property sales have declined dramatically in 2020 and promotional price reductions have reached up to 50%. At the same time, banks are rejecting twice as many mortgage applications as in the past, which mainly affects local buyers as foreigners are normally not eligible for loans from Thai banks. As a result, the supply of condominium units in Bangkok and...
The coronavirus pandemic has had a substantially negative impact on the Thai real estate market, particularly on the residential segment geared at foreign buyers.
According to a new survey by real estate and property research firm Juwai IQI, sales of residential property sales have declined dramatically in 2020 and promotional price reductions have reached up to 50%.
At the same time, banks are rejecting twice as many mortgage applications as in the past, which mainly affects local buyers as foreigners are normally not eligible for loans from Thai banks. As a result, the supply of condominium units in Bangkok and other popular locations is increasing, driving prices further down south.
The survey by Juwai IQI suggests that average new home prices in Thailand will decline by 3.9 per cent in the coming 12 months, while the forecast for used homes is worse, with average prices to decline by 6.7 per cent in the same period.
Residential rentals are expected to fall by 6.9 per cent over the next 12 months, before climbing again by an estimated 1.2% by the third quarter of 2022.
Lower transfer fees, quota changes suggested
Property developers, which are understandably nervous about the situation and are desperate to clear stock, have asked the Thai government for support. Proposals are to introduce incentives for foreign buyers, for example by allowing them to bid for residential units.
There are also suggestions to prevent an oversupply of property by increasing the 49 per cent foreign ownership quota in condominium buildings to 60 to 70 per cent in areas where unsold units exceed demand. The government should also increase the leasehold period on low-rise houses or villas from 30 years to 30 years plus 30 years of secure ownership, or 50 years in one registration, according to property lobby groups.
In the Juwai IQI survey, industry partners also proposed to reduce the special business tax and transfer fee for property transactions from 3.3 per cent and two per cent, respectively, to 0.01 per cent.
Another idea is to link a property purchase worth a certain base price – suggested is five million baht – to a long-stay visa and work permit, a policy that works well in a number of developed countries.
