Keep an eye on the 2024 measures to boost property sector
Properties priced between 3-7 million baht will benefit from the reduction in transfer and mortgage fees, while properties priced below 3 million baht
On April 9, 2024, the Cabinet approved the 2024 measures to boost property sector.
The newly approved measures include revision of registration fee reduction measure for ownership and legal transactions relating to residential properties in 2024, reducing the transfer and mortgage fee to 0.01% for the sale of residential properties valued not exceeding 7 million baht, an individual income tax deduction for home construction, and low-interest housing loans (Happy Home and Happy Life housing loan program), as well as a promotion of residential projects for low-income earners as part of the Board of Investment (BOI) housing projects.
The revised registration fee reduction measure for ownership and legal transactions relating to residential properties in 2024
SCB EIC assesses that the revision of the registration fee reduction measure for ownership and legal transactions relating to residential properties in 2024 will be most effective in boosting the property market relative to other measures introduced this round.
- The revised registration fee reduction measure for ownership and legal transactions relating to residential properties in 2024 is expected to gradually absorb the unsold units mainly in the mid-priced segment with price range of 3-7 million baht driven by potential buyers, particularly those already with home-buying plans. The measure may accelerate their decisions to purchase properties within this year. Meanwhile, there is still a need to monitor the utilization of the low-interest housing loan program to boost the property market priced below 3 million baht.
- SCB EIC expects the revised registration fee reduction measures for ownership and legal transactions relating to residential properties in 2024 and other measures introduced this round to have a limited impact on overall market demand. The measure will stimulate demand from potential buyers, while buyers with moderate to lower purchasing power will continue to face pressures from household debts, high interest rates, and limited access to housing loans. As a result, the overall property market will remain sluggish in 2024. Residential property demand in 2024 will continue its downward trend with a slight decline from 2023. The total number of ownership transfers nationwide is expected to contract 2%YOY, and the number of units sold in Bangkok and its vicinity is projected to drop 1%YOY. Meanwhile, the total number of new residential units launched in Bangkok and its vicinity in 2024 is forecasted to fall 8%YOY as the number of unsold units remain high. Moreover, the increasing focus on mid-to-higher priced projects will result in a lower number of units per project compared to mid-to-lower priced projects.
The launch of new mid-priced residential projects must be proceeded cautiously.
SCB EIC anticipates a reduction in the unsold units in the 3-7 million price range, while developers are expected to increasingly launch new projects in the 3-7 million price range during the remainder of 2024, intensifying competition in the mid-priced segment. Therefore, the launch of new mid-priced residential projects in the remainder of 2024 and going forward must be proceeded cautiously to avoid risks of oversupply as demand will partly be absorbed this year as a result of the measure. Developers should also consider the competition from the resale property market, which is an attractive option for buyers.
