Thai Governments Property Stimulus Program

The newly sanctioned Thai property stimulus measures are poised to have a substantial impact on the real estate market and related sectors, particularly benefiting the Stock Exchange of Thailand (SET). By expanding the price range eligible for incentives to homes priced up to 7 million baht, the government aims to boost home buyers’ purchasing power and stimulate market activity. Here’s how these measures are expected to unfold:

1. Expanded Eligibility: Increasing the price limit from 3 million baht to 7 million baht covers a significant portion of the property market, estimated at 50-70%. This expansion is expected to broaden the scope of beneficiaries and stimulate demand across various segments of the housing market.
2. Cost Reductions: The reduction in transfer and mortgage fees from 2% and 1% respectively to a nominal 0.01% for homes priced up to 7 million baht translates into substantial cost savings for home buyers. According to projections, these fee cuts could lead to significant reductions in the overall cost of home purchases, thereby making home ownership more accessible and affordable.
3. Positive Impact on Listed Property Companies: SET-listed property companies stand to benefit significantly from these measures, as a majority of their units fall within the eligible price range. The anticipated increase in sales revenue and market activity is expected to bolster investor confidence and positively impact stock performance within the sector.
4. Additional Measures Under Consideration: While the approved measures are expected to stimulate market activity, attention is also directed towards potential additional measures that could further enhance the sector’s performance. These include considerations such as easing loan-to-value limits, tax cuts, and revisions to home ownership regulations for foreigners, among others.
5. Market Sentiment and Projections: Analysts and research centers anticipate a positive market sentiment following the implementation of these measures. Kasikorn Securities views the reduction in transfer and mortgage fees as a concrete and tangible measure that will drive positive sentiment in the sector. Additionally, projections suggest that the measures will mitigate the decline in property transfers, resulting in a more modest decrease compared to the scenario without stimulus measures.

Overall, the approved stimulus measures signal a concerted effort by the Thai government to revitalize the property market and stimulate economic growth. By reducing costs, broadening eligibility criteria, and fostering positive market sentiment, these measures aim to spur demand, drive property transfers, and support the recovery of the real estate sector. Click here to see one of the ways the Thai government are boosting the economy in 2024.