6 June 2024

House prices in Thailand are expected to increase towards the end of this year due to the rising costs of construction materials and land, as well as the anticipated minimum wage increase promised by most parties during the election campaigning, according to Vichai Wiratkaphan, acting director of the Real Estate Information Centre (REIC) of the Government Housing Bank, adding that it will be the second major price increase in recent years.

He said that commercial banks and other financial institutions have, however, exercised more caution in extending mortgages to customers after the Bank of Thailand decided not to extend the relaxation of loan to value ratio (LTV), a measure used to assess lending risk before banks approve a mortgage.

Moreover, he said that the government measure to help debtors affected by the COVID-19 pandemic is due to expire at the end of this year, which will put additional pressure on commercial banks to be more cautious when granting new housing loans.

To compensate for the anticipated drop in domestic purchasing power, he suggested that the new government review the foreign ownership ratio for condominiums in tourist provinces, such as Bangkok, Chiang Mai, Phuket and Chon Buri, to help real estate developers.

He also said that the reduction in property transfer and mortgage registration fees for residential properties not exceeding three million baht should also be revised, to focus on specific groups of people based on their incomes.

Vichai additionally proposed the creation of a housing loan guarantee fund, using about 10% of the property transfer fees collected each year as seed money, which will encourage financial institutions to extend more housing loans to home buyers.