Expectations in the REIC report for this year's real estate market are improving

The decline in the index is likely to be less significant. The overall residential real estate index forecast for 2023 has been raised as lower property transfer fees and mortgage interest continue to provide benefits to mid-price buyers.

Vichai Viratkapan, Acting CEO, Real Estate Information Center (REIC)

reported that its overall residential property index rose 21% last year to 91.7, up from 75.7 in 2021. The 2022 figure is the highest since 2019.

"The main driver was the leveraged loan-to-value [LTV] cap, which started in 2019 and softened in 2021, ending last year," Mr. Vichai said. "This year, we forecast a 1.6% decline in the index to 90.2 as there are risks outweighing the positives."

The overall residential real estate index forecast is derived from supply and demand estimates that are influenced by economic factors including GDP growth, interest rates, key policies and environment, inflation rate and absorption rate of residential units.

The forecast of 90.2 for the 2023 index was raised this month from 89.5 last November as some factors changed. The main driver of the increase was demand, including housing transfers and new mortgages," Mr.

"Last November, we estimated an 18.5% decline in terms of housing transfers for 2023, as real estate measures expiring on December 31, 2022, attracted future demand in the first two months of 2023 for transfers in the final months of 2022," he said.

At the end of December 2022, measures were announced to keep the mortgage fee for apartments up to 3 million baht unchanged at 0.01% for another year. However, the transfer fee was increased to 1% from 0.01%.

REIC expects annual housing transfers to total 352,761 units, worth about 1 trillion baht, representing declines of 10.2% and 4.5% respectively. This is better than the projected decline of 18.5% and 6.2% in November 2022.

"The number and value of transfers will continue to decline due to the cessation of LTV easing," Mr. Vichai said. "But with the extension of real estate measures, the decline will not be as significant as previously predicted."

Factors that have deteriorated since November 2022 include the GDP growth forecast for 2023 as it has been lowered to 3.5% from 3.7% and the inflation forecast which has been raised to 3% from 2.6%.

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