Relaxing Loan-to-Value Limits a Key Objective
Developers and industry experts are urging the government to extend existing property support measures and relax loan-to-value (LTV) limits for second- and third-time homebuyers to stimulate a sluggish domestic market as demand is projected to remain weak in 2025.
Nuttaphong Kunakornwong, CEO of SC Asset Corporation, emphasized that ongoing challenges from the previous year are suppressing housing demand and that potential buyers are adopting a more cautious stance due to tightening mortgage conditions from financial institutions.
Last year’s temporary reductions in transfer and mortgage fees provided a much-needed boost to demand, but these initiatives are set to expire at the end of 2024, according to Nuttaphong.
“To revive demand, it is crucial to extend these measures immediately and ensure they benefit all price segments,” he stated.
Chaiyan Charakarul, chairman of Lalin Property Plc, echoed this sentiment, urging the government to expedite the review process to extend these supportive measures without unnecessary delays.
Data revealed a 7.5% drop in housing transfers in Greater Bangkok last year, falling to 81,580 units from 88,206 in 2023, marking a substantial 34.7% decline compared to 2019.
Low-rise home sales experienced a steep 20.6% decrease, plunging to 33,956 units, whereas condominiums saw a slight uptick of 4.9%, reaching 47,624 units. However, most condo transactions stemmed from presales made two years ago, with some demand fueled by foreign investors.
Despite a rise in condo transfers, comparisons to 2019 show a 35.4% downturn, with low-rise house sales also down by 33.7%.
Artitaya Kasemlawan, head of residential sales, pointed out that many potential homebuyers are encountering challenges in securing mortgages, which has further depressed sales and transfer volumes.
“Although the number of new property launches has declined in sync with sales, the inventory of unsold homes continues to rise, particularly in the low-rise segment,” she noted.
According to research, the stock of unsold low-rise housing units in Greater Bangkok has been increasing annually, showing a consistent upward trend from 2019 to 2024, totaling approximately 155,000 unsold units as of now.
With new supply dropping to 22,256 units last year and projected to fall even lower this year, the growth in unsold inventory is expected to slow considerably, reaching around 159,000 units by the end of 2025.
A reduction in interest rates could significantly enhance affordability for prospective homebuyers, especially with a potential decrease of up to 1%, Artitaya suggested.
Relaxing LTV limits for additional homebuyers could also spur demand in higher-end markets, where buyers often look for properties close to schools or workplaces, according to Nuttaphong.
“While LTV limits are designed to curb speculation, it’s important to note that speculative activity has waned in the current market,” he added.
“To boost domestic demand and facilitate mortgage approvals for homebuyers, these limits should be eased across all price ranges as surplus inventory exists throughout the market.”
