LPN Wisdom forecasts that the real estate market in 2022 is likely to grow by 15-20% due to the reopening of the country and the relaxation of LTV measures. However, the increasing household debt and the potential for a new wave of the COVID-19 pandemic, particularly the Omicron variant, pose risks that could impact the real estate market in 2022.

Mr. Prabhandak Raksaiyawan, Managing Director of LPN Wisdom and Solutions Co., Ltd. (LPN Wisdom or LWS), a research and consulting firm in real estate development under L.P.N. Development Public Company Limited (LPN), discussed the outlook for the real estate market in 2022. He stated that the market is expected to grow by approximately 15-20%, in line with economic growth predictions of around 3.5-4% from the Bank of Thailand (BOT) and the National Economic and Social Development Council (NESDC). This growth is attributed to government measures to reopen the country, allowing for increased travel, as well as temporary relaxations of housing loan regulations (Loan-to-Value: LTV), setting the LTV ratio ceiling at 100% for all types of housing until December 31, 2022.

Based on these trends, the LPN Wisdom research team predicts that in 2022, approximately 78,000-90,000 new projects will be launched in the Bangkok metropolitan area, valued at 305,000-318,000 million baht. This represents an increase of about 15-20% compared to 2021, as developers regain confidence and gradually launch projects that were postponed from 2021, along with new project launches planned for 2022.

“Horizontal properties” remain strong

“Single-family homes and townhouses will continue to be the most launched products in 2022, with an expected increase of about 40-50% compared to 2021, in response to the ongoing demand for housing driven by the work-from-home trend that has changed residents' behaviors. It is estimated that the number of new residential units will be around 46,800-54,000, valued at approximately 183,000-190,800 million baht.

Meanwhile, the trend for condominium launches in 2022 is expected to increase by 10-15% compared to 2021, as developers previously delayed condominium launches and focused on selling existing units. This has resulted in a decrease in the number of unsold condominium units in the market. As of Q3 2021, there were 83,914 unsold condominium units in the Bangkok metropolitan area, down 7.6% from the end of 2020, when there were 90,841 unsold units,” Mr. Prabhandak stated.

Regarding purchasing power and housing demand in 2022, Mr. Prabhandak noted that both horizontal properties and condominiums priced between 3-5 million baht remain in demand, especially in locations near both new and existing subway lines. Popular areas include those adjacent to extensions of the green, red, and yellow lines, such as Rangsit-Nawankhor, Srinakarin-Suvarnabhumi, On Nut-Bang Na, and Don Mueang-Phaholyothin.

“In 2022, housing prices are expected to rise in line with increasing land prices due to the development of the rail transport system connecting inner and outer Bangkok, as well as rising construction material costs. It is estimated that housing prices will increase by about 5-10%, depending on the location. However, buyers will still have room for negotiation based on the competitive landscape among developers in each area,” Mr. Prabhandak added.

Nonetheless, in 2022, there are still risk factors that could affect housing purchasing power, particularly the high household debt burden, which will impact buyers' purchasing power and confidence. The strictness of housing loan approvals by financial institutions and the potential for a resurgence of the COVID-19 Omicron variant could adversely affect the real estate market in 2022.

Housing market contracted by 20% in 2021

In 2021, the forecast for new housing project launches in the Bangkok metropolitan area was approximately 53,000-55,000 units, valued at around 265,000-300,000 million baht. This included horizontal properties such as single-family homes, townhouses, and duplexes, estimated at about 33,000-35,000 units, valued at 166,000-188,000 million baht, representing a decrease of about 10%-20% from 2020. The condominium project launches were expected to be around 20,000-22,000 units, valued at 99,000-112,000 million baht, down 16%-23% from 2020. The number of new project launches in the Bangkok metropolitan area from January to November 2021 was 52,171 units, a decrease of 23% compared to the same period in 2020, with 20,295 condominium units launched at an average sales rate of 23% and 31,876 horizontal units at an average sales rate of 13%. Notably, November 2021 saw the highest number of new project launches for the year, with 11,648 new units launched in the Bangkok metropolitan area, valued at 52,185 million baht (accounting for 22.32% of total units launched from January to November 2021).

In terms of housing demand in 2021, horizontal properties remained the top sellers, particularly townhouses priced between 2-5 million baht and single-family homes priced over 10 million baht, with average sales rates of 14% and 22%, respectively. Meanwhile, newly launched condominiums priced below 3 million baht per unit received a positive market response, with an average sales rate of 27%.

“2021 was the year when the real estate sector passed its lowest point. Various government relaxation measures will support the real estate sector in 2022, allowing it to grow after facing the ongoing COVID-19 pandemic since 2020-2021. Although the sector may not fully recover to pre-pandemic levels, I believe that 2022 will be a year of hope and opportunity for real estate developers and buyers to acquire quality products at reasonable prices,” Mr. Prabhandak concluded.