Real estate developers have reiterated their calls for the government to expedite financial and tax relief measures, noting the sector is on track to record its lowest growth in two decades.
According to Issara Boonyoung, chairman of the real estate development committee of the Thai Chamber of Commerce, all key indicators in the real estate market this year are at their lowest levels in several years.
For example, the number of newly launched projects is the lowest in 20 years, and the number of property transfers is the lowest in a decade. Meanwhile, mortgages are at their lowest level in 8-9 years.
He said important measures currently supporting the real estate sector are the Bank of Thailand’s relaxation of loan-to-value rules and the temporary reduction of mortgage registration and transfer fees, slashed to 0.01% from the normal rates of 1% and 2%, respectively.
However, these measures are scheduled to expire in June next year.
The private sector is concerned this period will coincide with the transition to a new government, which may cause delays in extending these measures, said Mr Issara. Therefore, developers would like the current government to expedite the extension.
“This issue concerns the country’s overall economy, not only the real estate sector, because real estate is linked to the entire supply chain from upstream to downstream,” he said.
In addition, Mr Issara urged the Interior Ministry to amend land size requirements for different types of residential properties by reducing plot sizes, while still ensuring quality living conditions.
He proposed the minimum plot size for detached houses be reduced from 50 square wah to 35 square wah; for twin houses a dip from 35 sq w to 28 sq w; and townhomes from 16 sq w to 14 sq w. The goal is people seeking homes in urban areas can access more affordable housing, said Mr Issara.
Soonthorn Sathaporn, president of the Housing Business Association, said 2025 will be the third year of decline for the real estate sector, with sales expected to be the lowest in 10 years.
Sales this year are expected to fall to 320,000 units, down from 340,000 units recorded last year.
Likewise, housing loans are at a nadir, declining from 700-800 billion baht a year to roughly 500 billion this year. Of this amount, around 240 billion baht is from Government Housing Bank, with the rest spread across commercial banks.
New construction permits nationwide are expected to fall to 13.5 million square metres this year, equivalent to 100,000 housing units across the country, the lowest in 15 years, said Mr Soonthorn.
He said the reduced mortgage registration and transfer fees only apply to residences priced at 7 million baht or less.
Mr Soonthorn suggested expanding the fee reduction to all units, but applying the normal fee rate to the portion of the price exceeding 7 million baht.
In addition, he recommended Thai Credit Guarantee Corporation (TCG) provide guarantees for mortgages.
While TCG indicated it may consider guarantees for income-generating properties, Mr Soonthorn said the coverage should be extended to residential properties as well — guaranteeing a minimum of 20% of each loan.
He said the loan rejection rate this year is nearly half of all applications, whereas before the pandemic the rejection rate was only 5-10%.
Many young people work independently, such as YouTubers who have no fixed salary or payslips, and they are being rejected by financial institutions despite having high annual incomes, said Mr Soonthorn.
He also proposed the government assist mortgage borrowers who may be burdened with multiple debts, such as credit card debt, instalment loans for appliances, and car loans.
These debts should be consolidated into a single loan using the home as collateral, which would help lower the interest rate, as mortgage rates are generally lower than other types of loans.
Mr Soonthorn urged the Monetary Policy Committee to lower the policy interest rate, and for commercial banks to follow suit.
In addition, he supported extending maximum leasehold terms under “leasehold asset” contracts from 30 years to 60 years to attract foreign investment from people wanting to reside in Thailand. Under this model, property ownership would still remain with Thai nationals, said Mr Soonthorn.