House Price Hikes Expected Next Year

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House price hikes expected next year

BANGKOK, 18 November 2009 (NNT) - Unless the government lowers real estate-related taxes and specific business tax, house prices are likely to increase next year, says Preuksa Real Estate director and Chief Operating Officer Prasert Taedullayasatit.

Mr Prasert urged the government to extend the tax reduction, due to expire on 28 March next year, to prevent house price hikes by 3-4%. However, he said the extension was unlikely as the real estate sector's 3rd quarter performance had improved.

The specific business tax is 0.01% at present.

He added that an increase in interest rate next year would not affect property buyers' decision since the rate hike would be slight and commercial banks were in fierce competition offering soft loans.

Meanwhile, Siam Commercial Bank President Kanikar Chalitaporn said the interest rate was likely to rise to 0.25-0.5% in the latter half of the year, resulting in a decrease in liquidity. The bank expected that the 2009 loan growth would be less than 3% but would be higher next year, especially in the property, automobile, SME, and business sectors.

-- NNT 2009/11/18

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[quiksilva]

Developers can put prices up all they want, the test is whether buyers will pay them.

If you were ready willing and able to buy a THB 5,000,000 unit , would you ignore one on the market at THB 5,150,000?

[trogers]

Did I read the article correctly?

Cost of title transfer will increase or selling price of housing will increase?

[fivestar]

Did I read the article correctly?

Cost of title transfer will increase or selling price of housing will increase?

I think they are saying that any increase in transfer costs will increase the "gross" price paid for a property.

Regards

Robert

[trogers]

Did I read the article correctly?

Cost of title transfer will increase or selling price of housing will increase?

I think they are saying that any increase in transfer costs will increase the "gross" price paid for a property.

Regards

Robert

The 3-4% increase in gross price is good. Will discourage flippers as that will increase their risky venture by 15-20%. With a lack of flippers, developers face a more realistic market demand curve in their bookings.

[Suttisan]

Sorry, I'm a bit naive about housing, my wife pays the mortgage on our house will this be bad for us? i'm guessing the interest will go up but we can sell our property for a higher price?

[trogers]

Sorry, I'm a bit naive about housing, my wife pays the mortgage on our house will this be bad for us? i'm guessing the interest will go up but we can sell our property for a higher price?

Whether you can sell your house for a higher price will depend on supply and demand.

If demand is poor, don't hope. That's why they always tell you the 3 main factors affecting property value - location, location and location.

[thaihome]

Did I read the article correctly?

Cost of title transfer will increase or selling price of housing will increase?

I think they are saying that any increase in transfer costs will increase the "gross" price paid for a property.

Regards

Robert

The 3-4% increase in gross price is good. Will discourage flippers as that will increase their risky venture by 15-20%. With a lack of flippers, developers face a more realistic market demand curve in their bookings.

I don't think "fliipers" pay any tax. That comes when you register the property, which they rarely do, selling their contract when the project is finished and the developers raise prices from the off plan price.

TH

[trogers]

Did I read the article correctly?

Cost of title transfer will increase or selling price of housing will increase?

I think they are saying that any increase in transfer costs will increase the "gross" price paid for a property.

Regards

Robert

The 3-4% increase in gross price is good. Will discourage flippers as that will increase their risky venture by 15-20%. With a lack of flippers, developers face a more realistic market demand curve in their bookings.

I don't think "fliipers" pay any tax. That comes when you register the property, which they rarely do, selling their contract when the project is finished and the developers raise prices from the off plan price.

TH

If the gross price of the units will increase by 3-5%, how likely will developers able to raise prices during construction? That's why I said the risk to flippers will increase.

Say, you are a flipper and forking out 20% over 24 months. In times of low transfer cost, developers may raise prices of 8-12%. So a flipper hopes for a profit of 40-60% of the deposit.

If developers can only manage price increase of 5-7%, potential profit for flippers will be lower, thus a higher risk to return ratio.

Edited November 19, 2009 by trogers

[quiksilva]

Currently most housing developers pay for transfer fees, and have to pay specific business tax on every sale. The rate is currently less than 0.1% but will revert to 3.3% on the April 1st 2010 unless the government extend the promotion term.

If they do not , then the developers say that they will pass these 'extra' costs on to new buyers.

Suttisan: It will not affect you if you have already purchased your home.

[benchmark]

Currently most housing developers pay for transfer fees, and have to pay specific business tax on every sale. The rate is currently less than 0.1% but will revert to 3.3% on the April 1st 2010 unless the government extend the promotion term.

If they do not , then the developers say that they will pass these 'extra' costs on to new buyers.

Suttisan: It will not affect you if you have already purchased your home.

SBT is that 0.1 or 0.01 at present?

[quiksilva]

Sorry, I did not mean to say less, SBT is 0.1%

Municipal Tax remains 10% of SBT (i.e. 0.01%)

[PattayaParent]

Did I read the article correctly?

Cost of title transfer will increase or selling price of housing will increase?

I think they are saying that any increase in transfer costs will increase the "gross" price paid for a property.

Regards

Robert

Prices never came down when the tax rates were reduced because the price you see quoted for buying a house or condo invariably never include the transfer costs anyway.