INCENTIVES TO BE EXTENDED IF ECONOMY FAILS TO PICK UP

       The government would consider extending tax incentives to the property sector if the country were to experience weak growth next year, Deputy Finance Minister Pradit Pataraprasit said.
       Speaking at a seminar on "Where is the best location for investment", Pradit said the government would lend its support to the property sector if the economy did not do well.
       The seminar was organised by Krungthep Turakij, and three property associations - Thai Real Estate Association, Thai Condominium Association, and Business Housing Association.
       The government earlier this year extended tax incentives to the property sector until March 28, 2010. The tax incentives include a reduction in the specific business tax on property sales from 3.3 per cent to 0.11 per cent and a cut in transfer and mortgage fees from 2 per cent to 0.01 per cent. It also increased the tax allowance on property sales from Bt100,000 to Bt300,000.
       Meanwhile, mortgage loans in the property sector recorded only a 2.2-per-cent growth in the first half of this year due to the weakening economy. But the property market is expected to recover in the last quarter of this year as a result of credit growth.
       Mortgage loans are expected to increase by 6.7 per cent, Chatchai Phayuhanaveechai, deputy managing director of KasikornBank, said.
       If the government extends tax incentives to the property sector, that would help home-buyers to save costs by at least 5 per cent because the prices of construction raw materials have already risen, Wasan Kongchan, managing director of Agency for Real Estate Affair (AREA), said.
       He added that if the tax incentives expire on March 28, 2010, prices of residences will increase 7 to 10 per cent next year - 4 per cent from tax and transfer fees - as a result of the rise in the cost of construction raw materials.
       He added that demand for residences around the mass-transit system, especially Skytrain and underground trains, are popular for both home-buyers and investors as a result prices in these locations are likely to increase an average 10 to 20 per cent a year.
       The areas are Sukhumvit, Ratchadaphisek, Silom and Sathorn.
       However, the government's policy to extend Skytrain routes and underground train routes such as the Sathorn-Taksin and Onnuj-Baring routes will also drive demand for residential homes along the extended mass-transit system routes.
       He added that if the government succeeds in the construction of the new Skytrain and underground train routes from inner city to around the city, that will change demand for residential projects from condominiums to low-rise residential projects located close to the new extended routes.