If financial institutions maintain their mortgage rejection rates, the government’s recently launched property stimulus measures will have little effect because developers can only recognise sales revenue when such property is transferred, said association president Apa Ataboonwongse.

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The mortgage rejection rate has continued to increase the past couple of years, with the overall rate at 30% and as high as 50% for some projects, she said. The higher rejection rate could be attributed to the economic downturn, which lowers purchasing power.

Ms Apa said the value of property bought by foreigners since the middle of this year is near zero, hurt by the global economic slowdown and the baht’s strength.

Foreigners are fleeing to purchase real estate in Cambodia and Japan, shunning Thai property because the stronger baht means lower investment return, she said.

Half of the new residential supply is condominiums, but high-rise residential units account for 60-65% of new supply in Bangkok.

The cabinet on Oct 22 approved a property stimulus package that includes a temporary cut of mortgage and transfer fees to a single rate of 0.01% for homes priced at 3 million baht or less.

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The package is meant to help developers dispose of inventory. The fee cuts will run through Dec 24, 2020.

GH Bank also offers a 2.5% housing loan worth 50 billion baht for three years for properties priced at no more than 3 million baht, while property firms are preparing to launch a joint promotional campaign to stimulate demand.

Charnkitt Dejvitak, the vice-minister attached to the prime minister, estimates that the property stimulus measures, GH Bank’s cheap-rate mortgages and the promotional campaign will help real estate sales grow 5% next year.

He said developers can adjust to the effects of the Bank of Thailand’s tougher loan-to-value requirements.

Meanwhile, Pornarit Chounchaisit, president of the Thai Real Estate Association, said more than 500 property developers are participating in the promotional campaign. / WRITER: WICHIT CHANTANUSORNSIRI

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