Stimulus urged for flood-hit property areas

Demand for housing in flood-affected locations has dropped by at least 70 per cent compared with January and February last year, as home-buyers are concerned about the government’s measures to manage any possible recurrence of the flooding this year, Thai Condominium Association president Thumrong Panyasakulwong said yesterday on the sidelines of a |seminar.

"Some projects averaged sales of 15 to 20 units a week last year before the floods hit, but now the average is just two or three units per week," he said.

The market in the flooded areas normally accounts for about half of the property market in Bangkok and its suburbs, where 80,000 to 120,000 homes are sold each year.

If the government does not launch a stimulus package to help the market recover in the flood-prone areas, the overall Greater Bangkok market will likely be flat, but could drop by around 5 per cent, Thumrong warned.

He said the Thai Real Estate Association, the Business Housing Association and the Thai Condominium Association would jointly submit a stimulus-package proposal to the government aimed at supporting the market.

The proposal will suggest a reduction in the transfer fee from 2 per cent to 0.01 per cent, a lowering of the mortgage registration fee from 1 per cent to 0.01 per cent, and cutting the special business tax from 3.3 per cent to 0.01 per cent.

This would help the market recover and at the same time boost economic growth, as the property sector accounts for about 6 per cent of gross domestic product, he said.

Songtham Pinto, director of the Bank of Thailand’s Office of Macroeconomics, told the seminar that the property sector was an indicator of GDP growth, which made it a vital business sector that the central bank had to monitor to ensure sustainable growth.

When the economy faced a crisis, the property market was the last to recover, Songtham said, adding that this was why the Bank of Thailand had to have measures at its disposal to take care of the sector, ensuring that it never again faces a bubble situation, but experiences stable growth.

recovery in next quarter

He said he believed the property market would recover from the flooding in the next quarter, as the economy is still growing and interest rates are now suitable for investment in the sector.

Samma Kitsin, director-general of the Real Estate Information Centre, told the seminar that global warming and new home-construction technology meant property firms would shift to developing residences that match a shift in customer demand.

He also believes the property market will recover in the next quarter, having dropped by more than 20 per cent last year in terms of newly registered homes because of the negative impact of the flooding in the final quarter.

The centre estimates new residential projects will put between 90,000 and 100,000 units on to the market this year, compared with 83,000 last year.

Between 50,000 and 60,000 of the homes will be in condominium projects, and the remainder in detached housing, duplex and townhouse projects, he added.