Slowdown in the growth of Thailand's residential real estate market: rising interest rates and strict lending conditions. Business news.

** The residential real estate market in Thailand slowed down in the first half of2023 due to the prolonged impact of the COVID-19 pandemic and political uncertainty. According to the latest report by CBRE Thailand, the total number of new condos launched in Bangkok market in the first half of2023 was17,859 units, which is a decrease of35.6% compared to last year. The average demand level was55.4%, the lowest since2009.

The demand for single-story homes and townhouses has also decreased, as buyers have become more cautious and selective in the conditions of an economic downturn and rising household debt. The total number of new units presented in the Bangkok market and its surroundings in the first half of2023 decreased by24.4% compared to the previous year, totaling38,762 units. The average demand level was58.7%, lower than64.5% in the first half of2022.

It is expected that the market will continue to slow down in the second half of2023 if significant improvements in political stability do not occur. Developers are facing issues such as rising land prices, higher construction costs, stricter credit regulations, and declining consumer confidence. Many projects have been postponed or canceled until the market recovers..

Adverse factors include rising interest rates and stricter criteria for approving loans.

To stimulate the market, the government has announced several measures, such as extending tax breaks for home buyers and reducing fees for transfers and mortgage fees until the end of2023.

If the pandemic is under control and the political situation stabilizes, the market may begin to show some signs of recovery in2024. Demand for residential real estate may also increase from foreign buyers, especially from China and Hong Kong, who are looking for alternative investment and living opportunities. The government is considering easing some restrictions on foreign ownership and providing longer-term visas for qualified foreigners.

"The residential real estate market in Thailand is going through a challenging period, but it can also offer some opportunities for buyers looking for good deals or long-term investments. Developers are also adapting to the changing market conditions by offering more flexible payment terms, discounts, bonuses, and innovative products that align with new lifestyle trends and customer preferences."."

CBRE Thailand expects that the residential real estate market will continue to face challenges in the second half of 2023, and developers will need to adapt their strategies to cope with changing market conditions. The report notes that developers should focus on product differentiation, pricing strategies, digital marketing, and customer relationship management to enhance their competitiveness and sales.

The report also notes that the demand for single-story homes and townhouses remains strong, as buyers prefer low-density properties with more space and privacy. However, the supply of new low-density projects is limited due to a lack of land and high land prices in Bangkok and its surroundings. The average selling price of single-story homes and townhouses has increased by 6% and 8% respectively compared to last year.