The Thai government approved the latest scheme designed to help boost the sluggish property market. The aim is to help first-time buyers hoping to purchase a home that costs THB1.5 million or less. The Government Savings Bank (GSB), Government Housing Bank (GHB) and Krungthai Bank will all offer both pre- and post-financing worth a combined total THB70 billion with competitive interest rates to help the program work.
According to RHB Securities Thailand, the private sector is likely to offer a discount of at least two percent for low-cost homes and also pay housing transfer/mortgage fees along with fees charged for common areas in the first year. The government hopes at least 60,000 low- and mid-segment homes can be sold or leased as part of the new scheme.
Low-end buyers have been unable to receive mortgage loans due to strict lending measures from commercial banks and RHB Thailand believes this move from the government is a step in the right direction. Loans from state banks will make it easier for those looking to buy homes in this property segment, particularly with the competitive interest rates being made available.
The government measures, known as the Baan Pracharat scheme, will see the GSB and GHB provide post-finance loans worth THB40 billion, RHB Thailand reported. This figure is four times higher than the previous measures where THB10 billion was made available.
With the government’s other set of property measures targeting units costing THB3 million or less set to expire soon, RHB Thailand noted that developers are willing to sacrifice margins and have launched aggressive promotional campaigns to drive sales. Pre-sales in January and February were slower than anticipated and margins continue to be tight for a number of Thailand property developers. This has driven the need to do whatever it takes to clear inventories and book revenue.
