Thailand’s real estate market is confronting a historic crisis in 2025, with projections indicating that home loan growth will turn negative for the first time ever. This downturn is driven by a combination of weak consumer purchasing power, an oversupply of housing, and banks tightening lending standards across all income levels.
Experts warn that this crisis surpasses the severity of the COVID-19 pandemic because its root causes are structural, with issues spreading from low-end properties to mid-range and high-end segments. There are concerns about a potential “price war” among developers, which could severely harm the economy by diminishing homeowner wealth and destabilizing the lending system.
According to Chayawadee Chai-anant from the Bank of Thailand, the real estate sector “looks worse than before,” indicating increasing complexity and challenges. The main factor behind this decline is changing consumer behavior, as fears about future income lead to more cautious spending and investment in property. This has caused a decline in home sales and a decrease in home loan applications.
Financial institutions are also contributing to the downturn by adopting stricter lending criteria. Banks are now more risk-averse across all income groups, not just low to middle-income borrowers, due to the worsening economic outlook. Yuttachai Teyarachakul from UOB Thailand describes the situation as the “worst in a century” for the housing market, with the industry expected to see negative growth in home loans for the first time.
In response, banks are shifting focus toward the second-hand property market, where homes cost roughly 30% less than new builds in similar locations. This crisis is more challenging than the COVID-19 downturn because it is rooted in structural issues, including an oversized housing supply and a lack of purchasing power, especially for homes priced below 4 million baht.
Initially affecting the lower-end market (homes under 3 million baht), these problems are now spreading to properties in the 3-5 million baht range and even to the 10 million baht sector, indicating a broader economic slowdown affecting all income levels, according to Dr. Amonthep Chawla of CIMB Thai Bank.
A significant concern is the possibility of a “price war,” similar to last year’s car market competition. Developers may be forced to aggressively slash prices, leading to devastating consequences. Such a price war could erode the “wealth effect,” the sense of security associated with homeownership, which in turn could negatively impact consumer spending and economic stability.