The total number of new condominium units released in Bangkok in H1 2023 was 17,859 units, down 35.6% year over year, according to the most recent data from CBRE Thailand. the lowest level since 2009, the average take-up rate was 55.4%.
Due to the economic downturn and rising household debt, demand for single-detached homes and townhouses also decreased. Buyers became more cautious and picky. In H1 2023, 38,762 new units were released in Bangkok and the surrounding area, a decrease of 24.4% from the previous year. The average take-up rate fell from 64.5% in H1 2022 to 58.7%.
In the second half of 2023, the market is predicted to remain weak barring a dramatic improvement in political stability. The issues that the developers are dealing with include increased land prices, higher building expenses, stricter banking rules, and declining consumer confidence. Numerous projects have been put on hold or delayed until the market stabilizes.
Higher loan approval standards, higher interest rates
Higher interest rates, rising property buying costs, and more stringent loan approval requirements are unfavorable aspects.
The government has proposed a number of initiatives to boost the market, including the extension of tax benefits for homebuyers and a decrease in transfer and mortgage fees through the end of 2023. To assist low-income and first-time purchasers, the Bank of Thailand has also relaxed some of the regulations governing mortgage financing. These actions, however, might not be sufficient to improve market sentiment because consumers are still awaiting further information on the future of the economy and the deployment of vaccines.
Purchasers from Hong Kong and China
If the political situation is stabilized and the epidemic is brought under control, the market may start to show signs of recovery in 2024. Foreign purchasers, particularly those from China and Hong Kong, who are searching for alternative locations for both investment and habitation may further raise the demand for residential homes. The government is thinking about easing some of the limitations on foreign ownership and extending the validity of foreigners’ visas who meet certain requirements.
Although the Thai residential market is experiencing difficulty, it may also present some chances for buyers looking for deals or long-term investments. The developers are also adjusting to the shifting market conditions by providing more accommodating payment options, discounts, freebies, and cutting-edge goods that meet the needs of customers and the newest lifestyle trends.
According to CBRE Thailand, developers will need to modify their plans to deal with the shifting market conditions and the issues that the residential sector will continue to confront in the second half of 2023. To improve their competitiveness and sales performance, the research advises developers to concentrate on product differentiation, price strategy, digital marketing, and customer relationship management.
The survey also stated that because consumers chose low-rise buildings with greater room and privacy, demand for single-detached homes and townhouses remained strong. However, the lack of available land and the high land costs in Bangkok and the surrounding area restricted the number of new low-rise developments. Single-detached homes and townhouses had an increase in average selling prices of 6% and 8%, respectively, year over year.
