The Cabinet, November 26, 2019, approved new economic stimuli for 4Q19. These include a 50,000-Baht subsidy on a home purchase down payment to ease financial burden of new home buyers, being the government's third property stimulus measure so far this year.
The 50,000-Baht subsidy on a home purchase down payment is offered to buyers, each of whom must have an income not exceeding THB100,000/month or THB1,200,000/year. We at KResearch views that this measure will likely help support residential property developers, which are being plagued by numerous downside risks, to accelerate their promotional campaigns in order to induce more home buyers during 4Q19, thus generating cash flows throughout supply chain of the property market and allowing home buyers to use the subsidy for home installment payments or other purposes.
However, those eligible for the measure must get their mortgage loans approved by financial institutions; therefore this will depend on their qualifications, debt burden, income, employment and other criteria in accordance with the conditions of this program.
Meanwhile, KResearch is of the view that investment in the residential property sector and home ownership transfers in Greater Bangkok will continue to contract in 2019 because such activities were sluggish during much of the year. Although the number of home ownership transfers in Greater Bangkok began to recover slightly during 3Q19, it may shrink approximately 10.0 percent to 177,000 units during 2019. That figure is considered favorable as it leans towards the upper band of our projection made during the middle of 2019.
Meanwhile, it is expected that residential property developers will focus on accelerating the release of their inventories during 4Q19. As a result, KResearch projects that the number of newly build homes available for sales in Greater Bangkok may reach 105,000 units in 2019, shrinking 16 percent YoY.
Nevertheless, if the Thai economy recovers, it is expected that consumers will likely buy more homes to take advantage of property stimulus measures that are due to expire in 2020.