Property Sector To Rise In 2nd Half Of Year

Property sector to rise in 2nd half of year: KRC

BANGKOK: -- Thailand property business is still experiencing risk factors from surging oil prices, rising prices, and political uncertainty in the first half of this year, but the sector is likely to pick up in the second half due to the government's economic stimulus package and declining interest rates, according to the Kasikorn Research Center.

The leading think tank projected that the property business this year would continue dragging, with developers and consumers alike facing risks from political uncertainty, oil price volatility and rising inflation.

However, there appeared to be some positive factors in the market as the cabinet on March 4 approved tax measures to stimulate the property sector, including a decline in ownership transfer fees to 0.01 per cent from 0.2 per cent of the assessed price and mortgage fees to 0.01 per cent from 1 per cent.

Such measures would be put into effect for one year, beginning in the second or third quarters.

In addition, monetary policy concerns seemed to be easing as the Bank of Thailand's Monetary Policy Committee is expected to cut the policy interest rate at its meeting on April 9.

KRC believes the property market would recover in the second half of this year, partly because some consumers still slowed their purchase or transfer of housing units until the tax measures become effective.

At the same time, the consumers' decision to buy houses now might not only rest with the tax measures or with the movement of interest, but also depends on current economic conditions linked with the record oil price hikes.

Surging oil prices had pressed prices of construction materials and consumer products to go up, which would affect people's purchasing power. KRC said although the consumers would benefit from the latest property stimulus package and possible interest decline, they should be well-prepared for financial planning by considering their ability to repay in future, rather than benefits to be gained from the stimulus package.

--MCOT 2008-03-17