“LWS” predicts that the new housing market in Bangkok and its vicinity in 2024 will likely see a decline of 10% to 40% compared to 2023, due to a slowdown in purchasing power, despite a 0.25% decrease in interest rates.

Mr. Prabhan Sak Raksaiwan, Managing Director of LWS Wisdom and Solutions Co., Ltd., a real estate research and development company under LP.N. Development Public Company Limited, stated that the trend for new housing launches in Bangkok and its surrounding areas in 2024 is expected to decrease both in the number of units and the value of launches. It is estimated that the number of units launched will drop by approximately 20% to 40%, while the value will decrease by about 10% to 30% compared to 2023. The projected number of units launched in 2024 is between 59,000 and 79,000 units, with an estimated value of around 380 billion to 489 billion baht. This is attributed to a slowdown in purchasing power, even though the economy is expected to recover in the last quarter of 2024 and interest rates are likely to decrease after the Monetary Policy Committee decided to lower the policy rate from 2.50% to 2.25% last October. “The major issue in the real estate sector is that financial institutions are strict in approving mortgage loans, leading to a rejection rate as high as 70%, especially for properties priced below 3 million baht. Additionally, financial institutions are stringent in considering project finance, requiring sales of 30% to 50% before approving project loans, causing many developers to delay their plans for new project launches. Some projects that have already been launched are also postponed or canceled, while the existing inventory is still sufficient for sale, leading many developers to delay their plans for new project launches for the remainder of the year,” Mr. Prabhan stated.

As a result of this trend, the number of new housing projects launched in Bangkok and its vicinity in the first nine months (January - September) of 2024 has decreased, with a total of 251 projects launched, amounting to 41,453 units and a value of 274.767 billion baht, representing declines of 19%, 39%, and 19%, respectively, compared to the same period in 2023, which saw 310 projects launched, totaling 67,772 units and a combined value of 338.655 billion baht. The sales rate at the time of launch was 15% of the total units launched, down from 17% in the same period last year.

Among these, the number of new condominium projects launched from January to September 2024 totaled 45 projects with 15,123 units valued at 73.306 billion baht, reflecting declines of 26%, 52%, and 15%, respectively. The average sales rate at the time of launch was 27%, compared to 61 new projects launched in the same period of 2023, totaling 31,325 units and a value of 85.782 billion baht, with a sales rate of 27% of the launched units. Although the number of units and the value of new launches have decreased, the average price of condominiums in the first nine months has increased compared to the same period in 2023, with an average selling price of 4.85 million baht per unit, up 77% from 2.74 million baht per unit in the same period last year. This is due to developers tending to develop higher-value condominium projects to avoid the risk of loan rejections from financial institutions, along with the launch of high-value projects such as the Porsche Design Tower. The locations with the highest cumulative launches and sales in the third quarter (July - September) of 2024 are in Ramkhamhaeng, which has improved transportation access with the intersection of the Yellow and Orange subway lines.

In the housing market for properties priced below 10 million baht, the number of new projects and their value have also decreased, similar to the condominium market, with a total of 132 projects launched in the first nine months (January - September) of 2024, amounting to 21,620 units valued at 96.034 billion baht, reflecting declines of 22%, 31%, and 27%, respectively, compared to the same period in 2023, which had 170 projects, 31,345 units, and a value of 130.847 billion baht. This aligns with the declining consumer demand that has been observed since last year. The sales rate for residential properties at the time of project launch in the first nine months of 2024 was 8%, up from an average of 7% in the same period of 2023.

The most launched residential properties were townhouses, accounting for 51% of the total new units, followed by single-detached houses at 29% and duplex houses at 20%. In the third quarter (July-September), the highest cumulative launches were in the Rama 2 - Mahachai area, while the highest cumulative sales were in the Rangsit - Pathum Thani area, due to pricing factors that still allow access to the city center.

The Premium Housing Market Begins to Slow Down

The premium housing market is showing signs of slowing down due to challenging economic conditions that have been continuously growing since 2022, or since the post-COVID-19 pandemic period, where developers have adapted to meet the demands of high-income consumers. As a result, in the first nine months (January-September) of 2024, there were a total of 79 new projects launched, with 4,710 units valued at 105.426 billion baht, remaining stable in terms of the number of projects but decreasing in units and value by 8% and 14%, respectively, compared to the same period in 2023, which had 79 projects, 5,102 units, and a value of 122.025 billion baht. However, purchasing power is beginning to slow down compared to 2023, with an average sales rate at the time of launch of 9% in 2024, while in 2023, the sales rate was 13%. The new projects launched in 2024 are predominantly single-detached houses, accounting for 89% of the total units launched, with developers focusing on projects priced above 20 million baht per unit, and this trend is expected to continue due to land price factors and the increasing scarcity of suitable land for project development, with the highest cumulative launches and sales in the third quarter (July-September) occurring in the Ratchaphruek area.

“In addition to the declining trend in project launches, it is expected that the value of property ownership transfers in 2024 will be close to that of 2023, around 1.05 trillion baht, or may decrease by about 3-5% from 2023, due to financial institutions being strict in approving loans and the absence of measures to stimulate the real estate sector in the last quarter of the year. This follows the property ownership transfer value in the first half of 2024, which was 452.136 billion baht, down 5.7% from the same period in 2023,” Mr. Prabhan concluded.