KResearch, the research division of KasikornBank, has said the Thai government’s ‘Pracharat Housing’ programme will help increase demand for as many as 33,000 to 40,000 homes priced below THB 1.5 million each, and that homebuyers may require a mortgage of THB 1 million or more.
Importantly the firm said residential property developers will be able to release homes in their inventories costing below THB 1.5 million each.
On March 22 the Cabinet approved the ‘Pracharat Housing’ programme to offer soft loans to residential property developers and low-income earners nationwide, including civil servants and workers with irregular income, to help them own their first homes.
With it, property developers are required to shoulder certain expenses that account for about 6-7 percent of the total home price. Financial institutions must also raise the debt-to-income ratio for home applicants to between 50 and 80 percent.
However, KResearch noted that developers will likely continue to be pressured by persistent sluggishness in the property sector, because housing demand should soften after government stimuli expire amid economic risks that may cause some prospective buyers – especially low-to-medium income earners and those with irregular income – to postpone home buying.
Over the long-term it said that close attention should be paid to the debt-servicing ability of homebuyers having high debt-to-income ratios.
It added that consumers are advised to thoroughly study the details of the ‘Pracharat Housing’ programme and assess their long-term debt-servicing ability before undertaking a mortgage.
