The Thai residential market has been experiencing a slowdown in the first half of 2023, due to the prolonged impact of the COVID-19 pandemic and the political uncertainty.
According to the latest report by CBRE Thailand, the total number of new condominium units launched in Bangkok in H1 2023 was 17,859 units, a decrease of 35.6% year-on-year. The average take-up rate was 55.4%, the lowest level since 2009.
The demand for single-detached houses and townhouses also declined, as buyers became more cautious and selective amid the economic downturn and the rising household debt. The total number of new units launched in Bangkok and its vicinity in H1 2023 was 38,762 units, a drop of 24.4% year-on-year. The average take-up rate was 58.7%, down from 64.5% in H1 2022.
The market is expected to remain sluggish in the second half of 2023, unless there are significant improvements in the political stability. The developers are facing challenges such as rising land prices, higher construction costs, tighter lending regulations, and lower consumer confidence. Many projects have been delayed or postponed until the market recovers.
Higher interest rates and stricter criteria for approving loans
Unfavourable factors include higher interest rates, increases in expenses related to home purchase, and stricter criteria for approving loans.
To stimulate the market, the government has announced several measures, such as extending the tax incentives for home buyers and reducing the transfer fees and mortgage fees until the end of 2023. The Bank of Thailand has also eased some of the mortgage lending rules to help low-income and first-time buyers. However, these measures may not be enough to boost the market sentiment, as buyers are still waiting for more clarity on the economic outlook and the vaccine rollout.
Buyers from China and Hong Kong
The market may see some signs of recovery in 2024, if the pandemic is brought under control and the political situation stabilizes. The demand for residential properties may also increase from foreign buyers, especially from China and Hong Kong, who are looking for alternative destinations for investment and living. The government is considering to relax some of the foreign ownership restrictions and to grant longer visas for qualified foreigners.
The Thai residential market is going through a challenging period, but it may also offer some opportunities for buyers who are looking for bargains or long-term investments. The developers are also adapting to the changing market conditions by offering more flexible payment terms, discounts, freebies, and innovative products that cater to the new lifestyle trends and customer preferences.
CBRE Thailand expects that the residential market will continue to face challenges in the second half of 2023, and that developers will have to adjust their strategies to cope with the changing market conditions. The report suggests that developers should focus on product differentiation, pricing strategy, digital marketing, and customer relationship management to enhance their competitiveness and sales performance.
The report also noted that the demand for single-detached houses and townhouses remained resilient, as buyers preferred low-rise properties with more space and privacy. However, the supply of new low-rise projects was limited by the scarcity of land and the high land prices in Bangkok and its vicinity. The average selling price of single-detached houses and townhouses increased by 6% and 8% year-on-year, respectively.