The Thai property market has experienced a notable decline in the first quarter of 2024, with residential property transfers dropping by 13% compared to the same period last year. This marks the lowest level of transferred units since 2018, reflecting a significant slowdown in demand.
Key Takeaways
- Residential property transfers in Thailand dropped by 13% in the first quarter of 2024, indicating a significant slowdown in demand.
- New housing loans granted in the same period fell by 20.5% year on year, attributed to tighter loan conditions imposed by financial institutes.
- The transfer of horizontal residences saw a larger decline compared to condominium transfers, with the total value of transferred units reaching its lowest point in 19 quarters.
Decline in Residential Property Transfers
In the first quarter of 2024, residential property transfers to buyers decreased by 13% compared to the same period in the previous year, as reported by the Real Estate Information Centre (REIC) of the Government Housing Bank. From January to March, a total of 72,954 units were transferred, which is the smallest number recorded since 2018.
This decline is attributed to a significant slowdown in demand in the residential property market, with new housing loans also falling by 20.5% year on year. The drop in transfers was particularly pronounced for lower-priced residences, with units priced between 5-7.5 million baht experiencing the biggest decrease at 20%.
Impact on Housing Loans
Newly released home loans across the country mirrored the trend of housing transfers, dropping to a 25-quarter low of 122 billion baht. This represented a 20.5% year-on-year decrease, the biggest decline in over six years.
Sales among domestic buyers are slowing down, prompting the need for collaboration between the government and private sector to attract foreign buyers. Despite this, REIC remains hopeful that overall residential property sales in 2024 will expand by 5-10% year on year.
Broader Market Implications
The Thai real-estate market experienced a sales decline of 25-30% in the first three months of 2024, marking the lowest point in six years. The townhouse market saw its lowest sales in 12 years, since the flood crisis in 2011.
Additionally, transfer volumes were down across all sectors, marking the first time in 30 years that this has occurred. This reflects the weakened purchasing power of Thai consumers.
Expert Opinions and Future Outlook
“Thai real estate is considered global property, with foreigners viewing it as having good infrastructure, schools, amenities, and friendly people. This has led to 25% of the 1 trillion baht real-estate market value being purchased by foreigners in the past, often as a second home or vacation home,” said Prasert Taedullayasatit, president of the Thai Condominium Association.
Prasert noted during a seminar titled “Dissecting the Hot Issues in Real Estate: Where Are We Headed in the Second Half?” that real estate can be a key driver in restructuring the economy, second only to tourism. Therefore, it is advisable to develop a model similar to those of Singapore and the Middle East by creating large-scale, man-made real-estate projects.
For short-term measures to stimulate the economy, he proposed temporarily suspending LTV (loan-to-value) measures on a year-by-year basis. Once the economic situation normalises, the LTV criteria should be adjusted to apply to the third house of Thai citizens, particularly in the lower-middle market segment.
Additionally, it is suggested to push for and adjust the condominium ownership regulations for foreigners, increasing the limit from 49% to 69% on a voluntary basis in buildings where foreign ownership has already reached 49%.
In the long term, the proposal includes restructuring the economy by enhancing competitiveness within a legal framework. This also involves establishing a fund to assist low-income individuals who wish to own a home.
“It is expected to take two weeks to consult with the Housing Development Association and the Thai Real Estate Association before presenting to the relevant government agencies,” Prasert said. “This consultation aims to unlock various restrictions, allowing the real-estate sector to play a significant role in stimulating the country’s economic recovery.”
Sources
- Thai property market down 13%, with transferred units at lowest level since 2018 – Thailand Business News, Thailand Business News.
- Thai real-estate market slumps in first quarter, Nation Thailand.
