11 July 2024

Thailand’s residential market is still facing several challenges that will prevent it from making a full recovery in the short term. Research indicates that such unfavorable factors as the pandemic and the war in Ukraine have prompted home buyers to delay their purchases.

Speaking at a recent virtual press conference on the property outlook, Kamolpat Swaengkit, Country Manager Thailand of DDproperty.com said that the study suggests the housing market will recover slightly in the second half this year, albeit slowly as home buyers have been reluctant to purchase homes because of the economic downturn and inflation since the beginning of 2022.

“In addition, consumers are concerned over economic instability with the ongoing Russia-Ukraine war as well as the rising prices of fuel and construction materials. In short, buyers are reluctant to buy,” Kamolpat added.

The University of the Thai Chamber of Commerce’s consumer confidence index fell for four consecutive months to an 8-month low in April amid disruption caused by the COVID-19 pandemic as well as the impact of the Ukraine war.

“All data and forecasts have reminded us that the sector requires support and the government, developers and consumers are the three parties that can make the property market stay afloat,” said Kamolpat.

A study on the property outlook by Kasikorn Research Centre (KResearch) noted that the housing market in 2022 will be rife with challenges despite increased supporting factors. The reduction of the property transfer and mortgage registration fee to 0.01% for property prices up to 3 million baht has been extended to the end of 2022 following the Bank of Thailand’s easing of loan-to value (LTV) that allows homebuyers to borrow up to 100% of total home value. The Centre believes that the housing market recovery also depends on the spread of Omicron variant.

KResearch projects that the number of residential property transfers in the Bangkok and greater Bangkok (Bangkok Metropolitan Region or BMR) area in 2022 will be approximately 168,000-177,000 units, a growth of 1.8-7.3 percent, as opposed to a contraction of 16.1 percent estimated for 2021.

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The price index of the housing market in Bangkok has decreased by 1 percent compared to the last quarter. That’s a drop in the index by 17 percent compared to the pre-pandemic era.

Of all the segments, single-detached houses seem to be most popular in line with the New Normal living style. More projects have spread further to the outskirts of Bangkok. The single-detached house index has grown by 19 percent from the previous year, and 5 percent quarter to quarter. “The demand has continued to grow and has risen by 48% from the previous year,” said Kamolpat.

After experiencing what are believed to be the worst years in a while, the residential market is expected to pick up slightly in the second half of 2022. “Prices have not increased from the pre-pandemic level but have risen above those seen last year. We believe that the first half of 2022 will be the last period to see buyers’ prices,” said the DD property’s country manager.

The same can’t be said for the condominium segment, which is still far from showing any recovery with the price index 6 percent below the previous year. The segment will have to rely on the return of foreign buyers following the lift of travel restrictions.

DDproperty recommends the government come up with more attractive stimulus packages for the residential property sector. This could be through incentives, more tax breaks or any schemes that increase consumer confidence.

by Veena Thoopkrajae

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