Thailand’s central bank, the Bank of Thailand, is preparing measures to protect against what it has described as a ‘real estate bubble’.
The details of the planned initiatives are expected to be revealed on January 1, 2019, according to a statement from the National News Bureau of Thailand.
The Director of Financial System Stability for the Bank of Thailand, Sakkapop Phanyanukul, said the moves will focus on loans for second homes worth more than THB 10 million.
They will include a requirement for buyers to pay a down payment worth 20 percent of the value of the property as security for their home. This is up from the current requirement of between 5 percent and 10 percent.
Banks will also be limited to offering finance based on the amount of credit they have previously provided under the same security rules, Sakkapop added.
According to the Bank of Thailand, the measures are intended to maintain appropriate real estate prices and reduce risks, and also encourage real estate developers to plan their projects properly, reducing the possibility of a bubble.
A meeting to hear feedback from financial institutions will take place on October 11 with further opinions to be received by the Bank of Thailand online until October 22
The regulations will be announced during November before they take effect in 2019.
These new measures, when implemented, will apply to both new loans and refinancing.
Clearly the focus on second homes is aimed squarely at speculative Thai buyers.
It is almost impossible for a non-Thai to obtain finance from a Thai bank in their own name.
Many of Thailand’s property developers also currently require at least a 20 percent deposit when a sales and purchase agreement is signed however, some still offer minimal deposits of less than THB 10,000 to secure a unit.