While the property stimulus measures put into place by the government last year are expected to help bolster the Thai property market, the second-hand home market may not see these benefits and could be in for a slow year. Homebuyers are still concerned about the sluggish economy and banks continue to be selective about mortgage lending, especially for the low-end condo segment. These are both factors that will have a tremendous impact on the second-hand market.
The weak Thai economy has severely diminished the purchasing power of local buyers in the second-hand home market and this will continue to be the case 2016, Somsak Chutisilp, said president of the Real Estate Sales and Marketing Association (RESAM). He added, “Buyers in the second-hand home market are not confident about overall economic prospects. Many of them delayed making decisions in September and October after learning there would be tax incentives for the property sector.”
The property stimulus measures came into effect on October 29; however, the incentives have failed to boost market as much as expected. This is due in large part to the still-struggling economy in Thailand which has yet to turn around even with the property market seeing a small uptick.
“Buyers do get benefits from the incentives, but many of them are unable to get a mortgage,” Somsak said. “That is because the mortgage rules are stricter for buyers of second-hand homes priced at THB3 million or less. Applicants applying for a loan applications at this level are either rejected or get a lower credit line with less attractive interest packages.”
People buying second-hand homes priced THB5 million or more are more likely to see their mortgage application approved with a higher credit line and more attractive interest rates. This is because banks believe this group of buyers to be less likely to default on their loan.
Visit Kunatharakul, managing director of property broker Realty World Alliance Co, claimed the second-hand home market in both 2016 and 2017 is likely to stay flat because property tax incentives do not do enough to help buyers in this segment of the market.
