Housing prospects faded in the 1st quarter

Negative factors keep people's spirits down.

People are looking at real estate offers at the fair.

Forecast on the real estate market

The outlook for the real estate market remains uncertain for the first quarter as both developers and buyers lack confidence in executing and buying due to higher interest rates. Acting Director of the Real Estate Information Center (REIC) Vichai Viratkapan said both supply and demand for housing have been hit by higher interest rates, which have risen several times in the past year to the 2.5% level. "Developers are facing higher financial costs and the purchasing power of homebuyers is declining, which ultimately affects the income of developers," he said.

Demand for housing in Greater Bangkok

REIC conducted a survey on housing demand in Greater Bangkok last November at the House and Condo Fair, asking 500 respondents to gauge sentiment. The index for the fourth quarter of 2023 was 44.5, better than the results of the first nine months (41.2) but still below the average of 50, indicating that merchants' confidence in buying a home is low. "The low confidence is likely due to the slow economy affected by several negative factors, especially rising interest rates, which are expected to remain at this level for some time," Mr. Vichai said.

Negative impact on purchasing power

In addition, the Central Bank of Thailand is not going to ease restrictions on lending due to the swollen level of household debt. These factors have a negative impact on the purchasing power and confidence of homebuyers to purchase a home, as they fear mortgage denial, the center said.

Housing demand research

The study showed that 46% of respondents are between 25 and 34 years old and 60% have a job. About 35% of respondents earn between 15,001 and 30,000 baht per month. About 36% of respondents, up from 28% in the first nine months, want to buy a house to live in, while the proportion of those buying for investment has dropped from 18% to 15%. The main factors for buying are the convenience of traveling (12.6%) and buying for rental or speculation (12.4%).