For Phuket property buyers, the important question is not only what changed, but whether a national housing slowdown affects island demand the same way it affects Bangkok.
According to Siam Commercial Bank Economic Intelligence Center (EIC), Thailand’s residential market is forecast to contract for a fourth consecutive year in 2026. Total nationwide housing transfers are expected to decline by 5% year-on-year to 824 billion baht. In a prolonged conflict scenario involving the Middle East, the contraction could deepen to 10-15%.
The forecast reflects fragile purchasing power, high household debt, rising living costs and tight mortgage lending across Thailand.
Why the contraction matters
The key point is not that demand has weakened. That has been clear since 2023. The key point is that government stimulus measures introduced to support the property sector have not translated into a meaningful recovery.
Measures such as loan-to-value (LTV) relaxation and reduced transfer fees for homes priced less than 7 million baht remain in place, but buyer confidence has not returned.
Surachet Kongcheep, head of research at property consultancy Cushman & Wakefield Thailand, noted that mortgage rejection rates now exceed 50-60%. This is a structural constraint, not a temporary dip.
Middle- to lower-income buyers are constrained by rising expenses outpacing income. High-income buyers are delaying purchases and investments amid economic uncertainty. The Middle East conflict is expected to further dampen sentiment, raising living costs and discouraging both domestic and foreign buyers.
What the figures actually show
EIC expects residential sales in Greater Bangkok to decline across all segments in 2026, including mass and high-end housing.
For single detached houses and semi-detached homes, demand from middle-income buyers for units priced less than 20 million baht is expected to weaken due to slower income growth and rising living costs. Homes priced more than 20 million baht are also likely to see slower sales as high-income buyers delay purchasing decisions.
Semi-detached houses priced between 5-10 million baht may offer a relative bright spot, attracting middle-income buyers seeking better value and locations closer to the city compared with similarly priced single detached homes.
Townhouses, which target lower- to middle-income buyers, continue to face fragile demand, compounded by declining popularity and intense competition from lower-priced second-hand homes and condos.
In the condo segment, demand from lower- to middle-income buyers remains sluggish, particularly for units priced less than 5 million baht, as mortgage rejection risks remain high. Condos priced above 10 million baht are also expected to slow, in line with more cautious purchasing and investment decisions among high-income buyers.
However, ultra-luxury branded residences are likely to remain resilient, supported by demand from wealthy individuals, EIC said.
How this connects to Phuket property
Phuket’s property market is shaped by different demand drivers than Bangkok. The island attracts foreign buyers, lifestyle-led investors, retirees and long-stay visitors. Domestic buyers from Bangkok represent a portion of demand, but not the majority in the villa and high-end condo segments.
The national slowdown matters most for Phuket in two areas: domestic buyer confidence and Thai bank lending conditions.
If mortgage rejection rates exceed 50-60% nationwide, Thai buyers looking at Phuket property face the same constraints. If high-income Thai buyers are delaying purchases in Bangkok, they are likely delaying purchases in Phuket as well.
However, Phuket’s foreign buyer segment operates differently. Foreign buyers typically purchase with cash or obtain financing outside Thailand. They are less affected by Thai mortgage rejection rates, but they are affected by geopolitical uncertainty, currency volatility and confidence in Thailand as a stable investment destination.
The foreign buyer question
EIC noted that purchasing power from Chinese buyers is expected to continue to decline. The Middle East conflict is likely to weigh on foreign demand in the short term by dampening sentiment and delaying investment decisions.
However, the report also noted that geopolitical tensions may create opportunities from wealthy individuals seeking relocation or safe-haven assets amid uncertainty. In recent years, demand from affluent buyers in markets such as Russia, Taiwan and Myanmar has increasingly turned to Thailand as a destination for both investment and residence.
Demand from Middle Eastern buyers remains limited, accounting for only about 1% of total foreign condo transfer value, suggesting a relatively small direct impact on Thailand’s foreign market.
For Phuket, the question is whether uncertainty reduces foreign buyer confidence overall, or whether it redirects demand from other markets toward Thailand as a relatively stable Southeast Asian destination.
What remains uncertain
Kessara Thanyalakpark, managing director of SET-listed developer Sena Development, said the residential market was projected to rebound this year, but could contract amid escalating tensions involving the US, Israel and Iran.
“Last year’s market contraction was significant, and we anticipated a gradual recovery this year,” she said. “But since the conflict began in late February, market conditions are now expected to weaken compared with last year.”
EIC noted that the pace of recovery in the second quarter will depend on improvements in consumer confidence following the formation of a new government, as well as potential extensions or new measures to support the property sector.
For Phuket property buyers, the detail worth watching is whether government support measures shift focus from mass-market Bangkok housing toward foreign buyer incentives, long-stay visa reforms or infrastructure investment in tourism-dependent regions.
Frequently Asked Questions
Does the national housing slowdown affect Phuket property the same way it affects Bangkok?
Not necessarily. Phuket’s market is driven more by foreign buyers, lifestyle investors and tourism-related demand than by domestic mortgage-dependent buyers. However, tight lending conditions and high-income Thai buyer caution do affect Phuket’s domestic buyer segment.
Are mortgage rejection rates in Thailand affecting foreign buyers in Phuket?
Foreign buyers typically purchase with cash or obtain financing outside Thailand, so Thai mortgage rejection rates have less direct impact. However, geopolitical uncertainty and currency volatility may delay foreign buyer decisions.
Could the Middle East conflict reduce foreign demand in Phuket?
EIC expects the conflict to dampen foreign buyer sentiment in the short term. However, geopolitical uncertainty may also redirect demand from wealthy individuals seeking relocation or safe-haven assets toward Thailand.
What property segments are most affected by the national slowdown?
Lower- to middle-income segments face the most pressure due to mortgage rejection rates exceeding 50-60% and rising living costs. Ultra-luxury branded residences are expected to remain resilient, supported by demand from wealthy individuals.
What should Phuket property buyers watch for in 2026?
Watch for changes in government support measures, foreign buyer incentives, long-stay visa reforms and infrastructure investment in tourism-dependent regions. Also watch for shifts in consumer confidence following the formation of a new government.
Sources
- Bangkok Post — Property — Housing sector latest victim of war — link
