Latest property measures cast doubts

Tisco Securities said in its research that the measures would rather spur short-term speculation than help low-income earners, as intended by the government.

"Sales would rise as the measures would make it easier for potential buyers to make a decision and low-income earners would benefit from the anticipated cut in transfer and mortgage registration fees. Yet, tax rebates were unexpected and they are likely to boost short-term investment rather than helping the low-income earners," it said.

To buy a Bt3 million housing unit, the buyer should earn at least Bt60,000 a month. With the income, he/she could not be identified as a low-income earner, it said. Subjecting to the 15 per cent income tax bracket, they would save tax expenses by Bt12,000 a year. Meanwhile, higher-income earners, if making use of the tax measures, could save tax expenses by upto Bt36,000 a year. 

Siam Commercial Bank's Economic Intelligence Centre agreed that these measures would quicken the decision process of potential buyers, but should not entice many new buyers. The measures would thus help absorb housing units priced below Bt3 million, which are flooding the market. From 150,000 condominium units launched during 2013-2014, 70 per cent is priced below Bt3 million. Of total 32,000 single houses and townhouses launched this year, about 67 per cent is priced below Bt3 million.

The centre expected the measures to boost short-term demand but did not expect the measures to fully boost the industry as house purchases depend mainly on purchasing power and confidence. Moreover, banks remain put restriction on new loans because of high household debt level. 

"It is worth noting that household debt may rise due to the measures, which will boost the economy in the short term and help people to have their first homes. Long-term impacts on higher household debt should be monitored," EIC said.