Developers ask for support as Q2 property sales lowest in 12 years
Bank of Thailand’s loan-to-value ratio regarded as major hindrance to buyers wanting to purchase a home
Property developers have called on the government to roll out measures to support the real estate industry, including easing the Bank of Thailand’s loan-to-value (LTV) ratio to make it easier for Thais to obtain a housing loan.
The LTV is a risk assessment ratio that lenders examine before approving a loan. For example, the sum approved as a loan for homebuyers will depend on their income and credit history. This measure was introduced to control non-performing loans.
The Thai Condominium Association reported on Tuesday that overall property sales in the second quarter have slightly improved from the first quarter, but still contracted heavily compared to the same period in 2023.
“Townhouses and properties costing under 3 million baht have seen the lowest sales in 12 years, contracting 54% year on year,” said association president Prasert Taedullayasatit.
“This points to the fact that Thais are having trouble buying a house. Despite the high demand in the market, most customers are unable to get a loan from financial institutes.”
Prasert added that the transfer rate of properties to foreign buyers also slowed down in the second quarter. He attributed the trend to the political situation in Myanmar that has affected the decision of buyers from the neighbouring country, causing the sales among this group of customers to drop by 50% compared to the first quarter.
Prasert said the contracting sales are having a domino effect on the number of new townhouse and condominium projects launched in the first half of this year, which have fallen to the lowest in 13 years.
“Amid the sluggish economy and contracting purchasing power of customers, the government must immediately ease the LTV measure to reduce obstacles for buyers in lower and middle groups to obtain housing loans,” he said.
The association president also urged the government to roll out long-term measures to support the property market, including providing a subsidy for low- and mid-income earners looking to buy their first homes.
The money for this subsidy could come from tax collected from foreigners buying property in Thailand, he added.
