Property developers applaud government’s latest package to spur sales in low-income housing market

The measures, which target housing priced below Bt1.5 million, is likely to spur sales in Bangkok and peripheral provinces by Bt400 billion this year, which should raise the industry growth rate to 10 per cent, from the earlier estimate of 8 per cent, Pruksa Real Estate president and chief executive officer Thongma Vijitpongpun said yesterday.
 “We believe the ‘Baan Pracha Rath’ loans will run out within three to four months, because demand to buy homes priced up to Bt1.5 million is strong, at 20,000 units a year,” he told The Nation by telephone after the Cabinet approved the new package.
Pruksa Real Estate has about 5,000 units ready for transfer in the price range covered by the scheme, he added.
Thongma said the government’s latest initiative was a boon to the property market, following the first set of measures announced earlier.
In the measures that are due to expire at the end of next month, the mortgage fee and transfer fee levied on a home purchase were both reduced to 0.1 per cent of the house price.
Prasert Taedullayasatit, president of the Thai Condominium Association, said the latest stimulus measure would drive the property market in the second quarter and also help meet serve strong demand from the lower-income segment. It is also expected to reduce the mortgage-application rejection rate from around 25 per cent currently to below 20 per cent this year, he said.
Of the total Bt70 billion in the government’s package, Bt30 billion is reserved for project financing, and is available to the state-owned National Housing Authority and property developers that join the scheme.
The package offers a discounted interest rate in the first two years to participating developers.
However, the developers must shoulder the transfer fee, which will be raised back to 2 per cent of the house price after April; the 1-per-cent mortgage registration fee; a 2-per-cent discount on house prices; as well as a one-year-free central-area fee.
The remaining Bt40 billion is for home-buyers, subsidising the mortgage rate for first-time buyers or those in need of loans for house renovation.
The renovation loans are being capped at Bt500,000 each.
Three banks are joining the scheme – the Government Housing Bank, the Government Saving Bank and Krungthai Bank – Deputy Finance Minister Wisudhi Srisuphan said after the Cabinet meeting.
The Government Housing Bank’s deputy managing director, Laiwan Pongsangium, said the bank had earmarked lending worth Bt30 billion to join the “Baan Pracha Rath” package, with Bt10 billion of the sum being for project loans at 4-per-cent interest for the first two years.
The remaining Bt20 billion will be for mortgages at zero interest for the first year for customers buying a property priced lower than Bt700,000, or for a renovation of up to Bt500,000.
Customers seeking a mortgage for a home costing between Bt700,001 and Bt1.5 million can benefit from a fixed interest rate of 3 per cent during the first three years, she added. The package comes into effect today.