Government help for the property sector will raise the number of new housing units registered this year by 15%, says Samma Kitsin, director-general of the Real Estate Information Centre (REIC).

The measures, allowing up to 300,000 baht of mortgage principal and 100,000 baht of payments to be deducted from taxable income, benefit homebuyers earning more than 40,000 baht a month. Some are expected to buy second homes as investments to use the incentives.

REIC as a result has raised its forecast of newly registered units this year from 61,000 to 70,000 units. For 2008, the figure was estimated at around 75,000 units, up from 74,221 in 2007.

"With the government's measures, the property market will pick up in the fourth quarter, on condition that the overall situation is good," said Mr Samma.

"In the first half, homebuyers may not make decisions as they can wait until the end of the year."

Mr Samma added that those also seeking to benefit from interest reductions should purchase a unit as soon as possible. However, they should compare their tax deduction with the possible lost opportunity from cheaper unit prices due to lower construction costs.

Units priced around two million baht are likely to be affected, as homebuyers motivated by a discount of 300,000 baht are not looking for high-priced units, he said.

He described 2008 as an abnormal year, with a rise in newly launched units despite unfavourable market sentiment and the spread of the economic crisis from the United States.

"Developers launched new units in order to tap demand boosted by the property tax incentives that took effect from March 29, 2008," he said.

According to a survey by REIC, at the end of the third quarter last year there were 244,816 housing units from 1,126 projects on the market in Greater Bangkok, up from 230,048 units in 2007.

Of these units, 155,819 from 913 projects were low-rise and 88,997 from 213 projects were high-rise - up from 153,183 and 76,865 units, respectively, in the year before. In the low-rise segment, 90,911 were completed units (87% sold), 29,424 were under construction (34% sold), 35,484 units were yet to start construction (12% sold).

In the condominium segment, 36,395 units were completed (90% sold), 41,153 were under construction (71% sold) and 11,449 were yet to start construction yet (62% sold).

The average price of a housing unit was around 2.5 million baht. In the low-rise segment, 13% were priced below one million baht, 52% at one million to 2.99 million, 25% at 3-4.99 million, 6% at 5-7.49 million and 3% at other prices.

In the condominium segment, 27% were priced below one million baht, 46% at one million to 2.99 million baht, 13% at 3-4.99 million baht, 5% at 5-7.49 million baht and 8% at over 7.5 million baht.

Mr Samma said the absorption rate at the end of the third quarter was 14% for low-rise units and 33% for condominiums. However, the situation deteriorated in the fourth quarter and the absorption rate halved.

"In a normal situation, the current supply could be absorbed within the next three quarters. But in this worse situation, it may take up to two years," he said.

The high-rise segment is set for the strongest impact because, in normal conditions, absorption would be shared by speculation. Condominiums under construction might face liquidity problems if fewer than one-third of the units are sold, Mr Samma warned.

"Those [condominiums] with low sales where construction has not started will not be hurt as much as under-construction projects," he said.

"Developers can refund booking deposits to customers and decide to freeze construction or sell the project to large developers."

source : www.bangkokpost.com