Developers propose steady flow of economic measures

Assoc. Prof Manop Bongsadadt

Assoc. Prof Manop Bongsadadt

The government should keep using measures to stimulate the economy, relax some rules that prevent real estate growth and resolve non-performing loans (NPLs) among low-income earners, property experts suggest. The latest measure allowing home buyers to deduct 300,000 baht of mortgage principal from taxable income has already lifted consumer sentiment in some segments.

For instance, Property Perfect Plc doubled its sales in the second half of January, recording total sales of 450 million baht in the month, 30 million more than a year ago.

Assoc. Prof Manop Bongsadadt, a property expert and lecturer at Chulalongkorn University, said government measures should help improve the economy by the second quarter.

Any additional property measures should focus on low-income earners as they currently are not receiving many benefits, he said.

”NPLs might rise in this sector. The government should extend loan payment periods, turn debtors into tenants or try to restructure loans to reduce possible non-performing loans and prevent banks from having to set additional reserves,” he said at a seminar held yesterday by the Real Estate Information Center.

He said real estate prices would bottom out by the middle of the yearDr Manop added there should be fixed low interest rates with longer terms. The government should also extend the leasehold period to longer than 30 years as housing prices for leasehold units would decrease, helping lower-income earners as well as the market for foreign buyers.

Chainid Ngowsirimanee, managing director of Property Perfect, said the government should have other measures to stimulate the economy, especially the tourism industry as its contributions multiply to the overall economy.

”Low interest rates should help boost the property market. The Government Housing Bank’s capital should be raised,” he suggested.

Mr Chainid said that the government should also reduce or cancel the 30% downpayment requirement for houses priced over 10 million baht to help spur the upper end of the market.

He said real estate prices would bottom out by the middle of the year.

Khan Prachuabmoh, the GH Bank president, said the Bank of Thailand’s benchmark interest rate should decline to below 2% by June as rates in other countries are already at rock bottom.

He said this year new mortgage loans would be slightly higher than 200 billion baht with a potential to rise if the new incentives generated maximum benefits to the market. Last year new mortgage loans totalled 250 to 260 billion baht, lower than 270 billion baht in 2007.

Thongma Vijitpongpun, chief executive of Preuksa Real Estate Plc, said tighter lending criteria for mortgages resulted in a decrease in the consumer confidence index, a drop in housing sales and an increase in rejection rates.

He said the economic slowdown would last all year, delaying decision-making by homebuyers. By the end of the year, newly registered houses from developers would decline by 10% or around 5,000 units from 56,161 last year.

Mr Manop suggested developers manage their cashflow better while small firms should seek partners or joint investments with large developers.

About the author

Kanana Katharangsiporn Kanana Katharangsiporn
Kanana Katharangsiporn is a senior journalist with The Bangkok Post, Thailand's first English language newspaper and specialises in property and real estate areas.
Other posts by Kanana Katharangsiporn ( 30 )
Website: http://www.bangkokpost.com/

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