Thai property stimulus measures to boost SET and lower costs

The Stock Exchange of Thailand (SET) is set to benefit from the newly sanctioned Thai property stimulus measures, which are expected to significantly lower costs for homebuyers. The reductions in transfer and mortgage fees apply to up to 70% of units available in the property market.

The Cabinet this week approved measures for homes priced up to 7 million baht. This price range covers 50-70% of the property market, a substantial increase from the previous limit of 3 million baht that accounted for only 15-20% of the market, as per brokerage reports.

Asia Plus Securities’ (ASPS) Executive Vice-President Therdsak Thaveeteeratham expressed his belief that these measures will boost sales among listed property companies. The agreed-upon cuts to transfer and mortgage fees from 2% and 1% respectively to 0.01% apply to first and second homes priced up to 7 million baht.

Additionally, an income tax deduction of up to 100,000 baht for home construction costs has been proposed.

According to Asia Plus Securities, the reductions in transfer and mortgage fees will decrease the cost of home purchases by 19,850 baht for every 1 million baht of home price. These cuts could lead to cost reductions for a first home worth 5 million baht by 99,250 baht.

For a home priced at 7 million baht, the reductions could save homebuyers up to 138,950 baht.

Therdsak commented that the fee cuts for homes priced up to 7 million baht would benefit SET-listed property companies as most of their units fall within this price range. This is expected to increase sales revenue from the 2023 year-end backlogs of 205 billion baht, with 113 billion ready for transfer in 2024, and inventories worth almost 800 billion.

However, ASPS indicated that investors should watch whether more measures will be approved, such as easing of loan-to-value limits, a one-year land and building tax cut of 50%, revision of homeownership regulations for foreigners, extending from 30 to 60 years, and high loan rejection rates from banks.

Kasikorn Securities agreed that the property stimulus measures created positive sentiment for stocks in this sector.

“Reducing transfer and mortgage fees is considered the most concrete and tangible measure granted to the sector.”

Kasikorn Research Center suggested that the measures should drive property transfers for the last nine months of this year, resulting in a decline of only 1.6% in 2024 compared with the previous year. Without these measures, the dip would be 3.6% this year, reported Bangkok Post.