Despite slowing inflation, the residential market in the first few months of 2023 has been sluggish, the real estate sector reports. Overall, the housing demand in Thailand has dropped and consumer purchasing power remains weak, although the sector is hoping to benefit from new government policies.
Leading property website DDProperty says higher interest rates are the main barrier for home buyers, resulting in a 2% decline in housing demand in the second quarter of this year.
The latest DDProperty Outlook Report found that property prices remained stagnant, and the residential price index decreased across all properties. The government’s new economic stimulus plan is anticipated to provide clarity and serve as a significant aid to economic recovery, along with stimulating consumer spending. These factors are expected to contribute to the real estate market’s recovery in the second half of this year.
Wittaya Apirakviriya, General Manager of Think of Living and DDProperty, said that consumer interest in home buying,especially among the middle-to-lower brackets, might decline due to uncertain economic trends.
“The unfavourable factors include higher interest rates, increases in expenses related to home purchase, and stricter criteria for approving loans. These would increase their burdens so home buyers may need to review their financial readiness and plan ahead to cope with the financial requirements,” he said.
For home-seekers with low income, Wittaya suggested resale projects or the second-hand housing market, which offer the same original prices, as an attractive alternative for those who want to own a home at this time.
Wages in Thailand are not only one factor in potential investor decisions
Low-rise, midtown and suburban condominiums in demand
However, DDproperty noted that compared to the pre-pandemic period, single houses are showing growth with a 6% increase in the price index, while townhouses have decreased by 5% and condominiums by 20%.
The demand for horizontal residential properties in Bangkok, according to DDproperty, continued to grow steadily in the latest quarter. Detached houses and townhouses both experienced an increase in their market shares. The proportion of horizontal residential properties increased to 15%, while townhouses increased to 11% of the total residential properties in Bangkok in second quarter of 2023 (an increase of 3% from the previous quarter).
Property consultant CBRE Thailand says domestic buyers showed a preference for low-rise housing, preferring low–density, larger and more adaptable spaces. Responding to the trend, CBRE foresees developers would this year be more active in launching low-rise projects that target real demand
“Buyers nowadays know what they want,” said Artitaya Kasemlawan, head of residential sales (projects) at CBRE Thailand, adding that important factors on buyers’ lists include space functionality, privacy, open green spaces, wellness and technology. And for luxury and super luxury, the list includes anything that meets today’s requirements such as space that can be adapted as a home office or parking with EV charger.
CBRE expects developers to continue launching condominium projects in midtown and suburban areas, and a trend to watch is mixed-use projects with residential and commercial elements. In the downtown area, CBRE expects developers to continue concentrating on their ready-to-move-in inventory before considering the launch of new projects in the second half of the year.
CBRE forecasts 50,000 new condominium units will be built in midtown and suburban areas compared to only 7,000 downtown.
Wittaya from DDProperty added that all parties are looking for clarity in the new government’s economic stimulus plan, which will drive the continuous recovery of the Thai economy.
“We hope the new policies will address the higher cost of living and stimulate consumer purchasing power to return to its previous level. At the same time, real estate developers and consumers are anticipating policies related to the real estate sector that will make it easier for Thais to become homeowners despite rising interest rates,” Wittaya said.
Thai PBS Business Desk
