The survey by EIC indicates that the housing market is slowly recovering from postponed purchasing plans, with most people believing that market recovery still requires stimulus measures. The majority of consumers are interested in affordable horizontal housing, and the second-hand housing market continues to attract significant interest.

The housing market has been affected by the COVID-19 pandemic in various ways, including a slowdown in demand and changes in housing selection behavior.

  • Demand for housing has slowed, particularly among vulnerable income groups, leading to delays in purchasing homes by 2-3 years and reductions in housing budgets due to various constraints such as decreased income and lower loan amounts from banks.
  • The provincial market remains sluggish, not only due to the slowdown in real demand in areas affected by the slow economic recovery but also due to purchases for second homes for investment and retirement preparation. Meanwhile, foreign market purchases are also recovering slowly, with Chiang Mai being the most sought-after province for housing purchases.
  • Most people are turning to horizontal housing as it meets the space requirements of the New Normal era, with technology playing an increasingly significant role in daily life.
  • Consumers are primarily interested in homes priced below 3 million baht due to weak purchasing power, making it challenging to find affordable single-family or duplex homes. This presents an opportunity for the townhouse and condominium markets.
  • In the current situation, where purchasing power remains fragile, there is considerable interest in second-hand housing due to lower prices compared to new projects. Additionally, consumers prefer locations that are convenient, such as near workplaces and educational institutions, making it difficult to find affordable new housing in certain areas.
  • The recovery of the housing market still depends on stimulating factors, including government measures such as relaxing the loan-to-value (LTV) ratio, allowing for 100% borrowing, and extending measures to reduce transfer and mortgage fees for homes priced below 3 million baht, along with promotional campaigns from developers during COVID-19 to accelerate housing purchase decisions.

Apart from location, housing style, and price level, consumers also prioritize project designs that meet various living needs, including after-sales services that cater to residential requirements.

  • Technology plays an increasing role in buyers' decisions, especially regarding security systems and energy management that facilitate convenience and cost savings for residents.
  • Safety is the top priority for homebuyers of all ages, with alarm systems being the most desired smart home features, along with security standards within the project. Following that, the flexibility of living space within the home is also important, allowing for adjustments based on residents' needs in different situations.
  • In addition to the two main factors, other priorities for different age groups include:
    1. Gen Y & Z: While they desire high personal independence, they also value universal design that considers various family members, such as young children, the elderly, and pets.
    2. Gen X and Baby Boomers prioritize designs and systems that promote energy efficiency, reflecting their focus on long-term cost savings.
    3. Moreover, all age groups value the option to customize designs or materials.
  • Applications for contacting property management are the most influential after-sales service affecting housing purchase decisions, reflecting consumer behavior that seeks quick and convenient communication and access to technology that enhances residents' convenience.

EIC believes that developers still face challenges in developing housing with rising costs, while the market has many limitations due to slow recovery in purchasing power. This necessitates caution in launching new projects, focusing on potential buyer groups, and managing risks to enhance long-term competitiveness, such as offering value and creating differentiation.

Challenges

  • The recovery in the near future is expected to be gradual, following the economic recovery, but the purchasing power situation, especially among vulnerable income groups, must be monitored.
  • Development costs for housing are likely to continue rising, including construction material prices, labor, and land costs.
  • There remains a risk of oversupply, necessitating careful management of new project launches and risk management.

Adjusting Strategies for Housing Developers

  • During the period when the housing market was affected by the COVID-19 pandemic, developers could still target buyers with purchasing power. Some buyers decided to purchase homes more quickly during the pandemic due to developers' promotions, buying before prices increased, and opting for larger homes to accommodate more time spent at home.
  • Offering value through products and services that meet basic housing needs, particularly regarding safety and flexibility in adjusting functions/designs suitable for living.
  • Creating differentiation through new products and services, such as health-related environments and services, technology, and new options for homebuyers to pay extra for services or technologies that enhance convenience and save costs in the long run.

Read the full report at...https://www.scbeic.com/th/detail/product/8292

By: Economic Intelligence Center, Siam Commercial Bank Public Company Limited EIC Online: www.scbeic.com Line: @scbeic