Restoring mortgage limit will delay Thai property market recovery: Condo Association
The Bank of Thailand’s plan to restore the loan-to-value (LTV) mortgage limit is a blow to the condominium market just as it was recovering from pandemic impacts, the Thai Condominium Association (TCA) warned.
The LTV rule places limits on loans granted to buyers and deters purchase of condos for speculation, said Athip Pichanon, honorary president of the TCA and the Housing Business Association, on Monday.
The central bank announced recently it would restore LTV rules by year-end to prevent household debt from rising. The LTV has been suspended since October 2021 to soften Covid-19’s impact on the property market.
“The condominium market will likely remain in a slump next year as more than 90% of purchases are by domestic buyers,” Athip said.
“Next year will also bring several negative factors that could drag the market down even further, including rising interest rates and construction costs that could jump up by 10%.”
Athip, who is also vice president of the Chamber of Commerce and Board of Trade, sees Thai economic growth at less than 3% next year but expects the property sector to expand 5-10% as it gradually recovers from pandemic impacts.
Agreeing with Athip’s warning, Wichai Wiratkaphan, acting director of Government Housing Bank's Real Estate Information Centre, said the resumption of LTV should be pushed back to the second half of 2023 to allow market recovery, especially in the low-priced and condo-speculation segments.
“Implementing LTV too early will disrupt growth of the condo market since only buyers with high purchasing power will be able to afford properties,” he said.
Wichai also urged the government to extend the cut in property transfer and mortgage fees to 0.01% until the end of 2023 to help the property market rebound.
Transfer fees have been lowered from 2% and mortgage fees from 1% for properties costing up to 3 million baht since 2019, but the measure is set to expire on December 31 this year.