The Real Estate Information Center of the Government Housing Bank (REIC), led by Dr. Wichai Wiratthakhan, the Inspector of the Government Housing Bank and Acting Director of the Real Estate Information Center, has revealed that the housing purchase confidence index in Bangkok and surrounding areas for the second quarter of 2024 stands at 39.6, which is a slight increase compared to the first quarter of 2024 (QoQ) where the index was 39.2. This level of confidence remains below the neutral point of 50.0, indicating that potential homebuyers still have low confidence levels. Despite the government's measures introduced in early April 2024 to stimulate the economy through the real estate sector, such as reducing transfer fees and mortgage registration fees to 0.01% for homes priced below 7.00 million baht, aimed at easing the burden on buyers during the transfer of ownership, and offering low-interest loans through the Government Housing Bank, including the Happy Home loan project with a budget of 20,000 million baht for homes priced up to 3.00 million baht, and the Happy Life loan project with a budget of 20,000 million baht for homes priced from 2.50 million baht and above, these measures have not yet significantly boosted market confidence.

However, the housing market continues to face pressure from several negative factors, such as (1) the cancellation of the relaxation of LTV measures by the Bank of Thailand, (2) the high household debt ratio exceeding 90% of GDP, which poses risks that financial institutions must consider more stringent lending criteria, resulting in a higher rate of loan rejections, particularly among low- to middle-income groups, (3) the policy interest rate remaining high at 2.50%, directly affecting purchasing power, and (4) the slow recovery of the Thai economy. These negative factors have led to a slower growth rate of income for potential homebuyers compared to the continuously rising cost of living, reducing their purchasing and repayment capabilities, which has directly impacted housing sales.

Additionally, the center has studied the demographics of survey respondents in various dimensions as follows:

Demographic Characteristics of Potential Homebuyers: The majority are female at 53.3%, with most belonging to the Gen Y and Gen Z groups aged between 25-34 years, accounting for 49.4%. Most have a bachelor's degree or equivalent, making up 69.9%. Furthermore, 59.0% of potential homebuyers are employed in the private sector, with 34.8% earning an average monthly income between 15,001 – 30,000 baht. Overall, the demographic characteristics are similar to the previous quarter in terms of gender, age range, education level, occupation, and average monthly income.

Regarding the Purpose of Purchasing New Homes: It was found that 32.1% of potential homebuyers want to own their homes, followed by 17.8% who wish to buy for investment/speculation/rental purposes, and 15.0% for asset acquisition. The combined proportion of those buying for investment and asset purposes is 32.8%, down from 33.3% in Q1 2024, reflecting that potential homebuyers still prioritize investment, wealth accumulation, and life security. Notably, the low confidence index for home purchases in Bangkok and surrounding areas in Q2 2024 may partly stem from concerns among those looking to invest and acquire assets regarding negative factors from LTV measures and the stringent lending practices of financial institutions that are not conducive to investment purchases, further pressuring overall confidence in home buying.

Meanwhile, factors that potential homebuyers are increasingly considering compared to Q1 2024 include the desire for convenient transportation and a better environment, with proportions increasing from 7.8% to 8.6% and from 7.6% to 7.8%, respectively.

When considering the characteristics of housing purchase demand, it was found that:

  1. Property Type: The majority want to buy both new and second-hand homes at 54.5%. Those wanting only new homes account for 37.2%, down from 38.9% in Q1 2024, while those wanting only second-hand homes increased to 8.3% from 8.2% compared to the previous quarter.
  2. Price Range of Homes: Most want to buy homes in the price range of 2.01 – 3.00 million baht, accounting for 25.3%, followed by the price range of 3.01 – 5.00 million baht at 24.9%. These two price ranges make up 50.2% of the total. Compared to Q1 2024, the proportion of those wanting homes priced below 1.00 million baht increased to 4.7% from 3.7%, and the price range of 5.01-7.50 million baht increased to 8.3% from 7.4%.
  3. Type of Housing: The majority want to buy single-family homes at 39.3%, with the highest demand in the price range of 3.01 - 5.00 million baht. Following that, 36.0% want to buy condominiums, primarily in the price range of 2.01 - 3.00 million baht. Townhouses have a demand of 19.4%, with most wanting to buy in the price range of 2.01 - 3.00 million baht. Twin houses have a demand of 5.0%, primarily in the price range of 3.01 - 5.00 million baht, and commercial buildings have a demand of 0.3%, with most wanting to buy in the price range of 2.01 – 3.00 million baht. When considering the age of respondents, those aged 18-44 show the most interest in buying single-family homes, while those aged 45-54 and 55 and above show the most interest in buying condominiums, likely due to their investment and speculation intentions as they often already own homes.

7. Provinces of Interest for Housing Purchases: When considering housing demand in Bangkok and surrounding areas in Q2 2024, it was found that:

  1. Bangkok has a housing demand proportion of 48.7%, with the highest interest in homes priced 2.01-3.00 million baht at 26.1%, particularly in locations along major subway lines near workplaces or communities, such as Rama 9, Bangna, Bangkae, Ladprao, and Huai Khwang.
  2. Nonthaburi has a housing demand proportion of 10.5%, with the highest interest in homes priced 3.01-5.00 million baht at 27.8%.
  3. Pathum Thani has a housing demand proportion of 8.0%, with the highest interest in homes priced 1.51-2.00 million baht at 24.3%.
  4. Samut Prakan has a housing demand proportion of 7.0%, with the highest interest in homes priced 2.01-3.00 million baht at 55.1%.
  5. Nakhon Pathom has a housing demand proportion of 5.0%, with the highest interest in homes priced 1.01-1.50 million baht at 23.8%.
  6. Samut Sakhon has a housing demand proportion of 3.9%, with the highest interest in homes priced 3.01-5.00 million baht at 66.7%.

Other provinces such as Chonburi, Chiang Mai, Phuket, and Prachuap Khiri Khan have a combined housing demand of 16.9%.

Methodology

The Real Estate Information Center of the Government Housing Bank has developed the "Housing Purchase Confidence Index in Bangkok and Surrounding Areas" by creating a quantitative index (Quantity index) in the form of a diffusion index through interviews with participants at housing and condominium fairs and self-administered surveys via the Real Estate Information Center's website, voluntarily from individuals aged 18 and above. The questions pertain to plans for purchasing new housing and the timeframe for such purchases. The methodology is as follows:

1. Data from the surveys are converted into qualitative data with 5 levels, categorizing responses into 5 meanings as follows:

    1. Timeframe within 1 month means having the highest confidence in purchasing housing.
    2. Timeframe 1 to 3 months means having high confidence in purchasing housing.
    3. Timeframe 3 to 6 months means having moderate confidence in purchasing housing.
    4. Timeframe 6 months to 1 year means having medium confidence in purchasing housing.
    5. Timeframe not exceeding 2 years means having low confidence in purchasing housing.
    6. Timeframe exceeding 2 years means having the least confidence in purchasing housing.

Once the data is converted into qualitative data with 5 levels, it is then transformed into quantitative data, scoring between 0 and 1 as follows:

    1. Timeframe within 1 month has a confidence score of 1.00.
    2. Timeframe 1 to 3 months has a confidence score of 1.00.
    3. Timeframe 3 to 6 months has a confidence score of 0.75.
    4. Timeframe 6 months to 1 year has a confidence score of 0.50.

 

    1. Timeframe not exceeding 2 years has a confidence score of 0.25.
    2. Timeframe exceeding 2 years has a confidence score of 0.00.

2. The quantitative data is then calculated in the form of a Diffusion Index, which ranges from 0 to 100, using the following formula:

   Index = (100 x percentage of respondents who answered “buy within 1 month and 1 to 3 months”) + (75 x percentage of respondents who answered “buy within 3 to 6 months”) + (50 x percentage of respondents who answered “buy within 6 months to 1 year”) + (25 x percentage of respondents who answered “buy within not exceeding 2 years”) + (0 x percentage of respondents who answered “buy in a timeframe exceeding 2 years”).

Interpretation

   When the index's midpoint is set at 50.0, the interpretation is as follows:

                           Index = 50.0 means potential homebuyers have moderate or stable confidence.

                           Index > 50.0 means potential homebuyers have high confidence.

                           Index < 50.0 means potential homebuyers have low confidence.

 

3. The data from the survey is analyzed descriptively (Descriptive analytics) to gain a deeper understanding of the housing purchase demand situation, using descriptive statistics, frequency distribution as percentages, and crosstab distributions.