Real estate is a key driver of the economy. Over the past six months, the real estate sector has noticeably slowed down, partly due to consumers postponing purchases to assess the economic situation and saving more money. Additionally, the real estate market has been affected by the Loan-to-Value (LTV) ratio regulations imposed by the Bank of Thailand (BOT), which has led to a less vibrant property trading environment in the first half of the year. Consequently, property developers have adjusted their plans to launch new projects and have focused more on clearing existing inventory. 

        According to the Housing Finance Information Center of the Government Housing Bank (GH Bank), the overall real estate market is valued at approximately 1.9 trillion baht, accounting for 12% of the Gross Domestic Product (GDP). This includes the transfer of ownership of homes and condominiums, which amounts to about 700-800 billion baht per year, or 5% of GDP. 

        As sales of various projects have decreased, this has had a direct impact on property prices in Bangkok and its surrounding areas. Data from the Real Estate Research Center of the Government Housing Bank indicates that the price index for new condominiums on sale in Bangkok and its vicinity during the second quarter of 2019 continued to grow, but at a concerningly slower rate due to an increase in the supply of unsold condominiums and a decrease in absorption rates, along with the LTV regulations affecting customer decisions. The condominium price index for the second quarter of 2019 stood at 150.5 points, up 8.2% compared to the same period last year and up 0.8% from the previous quarter, as developers accelerated customer purchase decisions through promotional campaigns. The index for Bangkok reached 151.9 points, an increase of 9.1%, while the surrounding areas recorded an index of 143.7 points, up 4.7%.

5 Locations Where Condo Prices Are Soaring This Year

          In the second quarter of 2019, the top five locations for new condominium projects with the highest price increases were Phaya Thai-Ratchathewi (up 20.2%), Bang Sue-Dusit (up 19.2%), the end of Sukhumvit (up 16.2%), the beginning of Sukhumvit (up 13.4%), and the eastern suburbs of Bangkok (up 10%). Compared to the first quarter of 2019, it is evident that condominium prices in the second quarter of 2019 grew at a slower pace, with the most significant increase seen in Bang Sue-Dusit (up 38.5%), Huai Khwang-Jatujak-Dindaeng (up 30.2%), the end of Sukhumvit (up 24.3%), Nonthaburi-Muang-Pak Kret (up 16.3%), and the Airport Rail Link (up 12.9%).

The Green Line Skytrain: A Popular Location for Condos Among Bangkok Residents

          It is clear that land in Bangkok and its vicinity, especially in areas served by the skytrain, remains a primary target for real estate developers, particularly for condominiums. The top five locations with the highest price changes in the second quarter of 2019 are undoubtedly along the Green Line , which has recently expanded its route to Ku Khot and Samut Prakan. This has led to a significant shift in the context of development along the skytrain route, with the Green Line from Ku Khot-Lam Luk Ka seeing land prices increase by 33.5%, the Green Line from Bearing-Samut Prakan by 29.3%, the Light Red Line from Taling Chan-Salaya by 22.7%, the Pink Line from Khae Rai-Min Buri by 17.8%, and the Blue Line from Bang Khae-Phutthamonthon Sai 4 by 12.8%.

          Customer behavior in choosing real estate has changed, with a greater emphasis on freebies rather than discounts, prompting developers to adjust their promotions to better align with customer preferences.

Popular Promotions Among Customers

                                                                            Q1/62           Q2/62           

Free gifts (furniture, appliances)                              38.5%             59.7%                        

Cash discounts                                                                      46.2%             27%   

Assistance with transfer fees                            15.4%             13.3%

 

          The slowdown in condominium price growth signals that the real estate market still faces considerable obstacles. Under the current economic conditions, the government has implemented regulations to control speculative investors, which may lead investors who previously viewed homes or condominiums as lucrative investment opportunities to reconsider their investment strategies. Real estate developers may need to take into account positive factors for consumers seeking homes or condominiums for genuine living purposes, ensuring that property prices reflect reality and offering various promotions to stimulate purchasing power.