The residential market in the first half of 2021 indicates a slight growth in sales compared to 2020, largely due to the ongoing Covid-19 pandemic, which has intensified compared to the previous year as evidenced by the rising number of new infections. Although the situation was similar due to the enforcement of lockdown measures for one quarter, the new wave of infections severely impacted the Thai economy, particularly in the third quarter, inevitably delaying the recovery of the residential business. While the underlying factors may be unclear, the situation has begun to improve as Thailand has managed to reduce the number of new infections, with the reopening of the country and improved economic activities compared to the previous year. This aligns with the growth in GDP compared to 2020, suggesting that operators are becoming more familiar with market conditions and adapting, which can be seen as a positive signal for the recovery of the residential market.

The enforcement of preventive measures by the government, the closure of businesses, and the restriction of various economic activities, especially in the tourism sector, were the main reasons that overall demand in the residential market did not return in 2021. Operators have been delaying the launch of new products continuously over the past two years, resulting in only a slight increase in market supply. It is estimated that total residential sales in 2021 will be around 76,000 units.

Sales conditions for different types of properties indicate that sales have increased for single-family homes and townhouses, but the condominium segment lacks a clear direction. Single-family homes have been the least affected compared to all types of housing, with estimated sales in 2021 around 11,000 units. Notably, sales of single-family homes have remained stable even during the crisis, reflecting ongoing demand from the middle to upper-middle income groups. In terms of price levels, townhouses have seen increased sales across all price ranges, which is surprising as buyers in this segment are expected to be those affected by the economic situation, particularly due to being denied loans from financial institutions. It is estimated that sales for townhouses this year will be around 28,000 units, compared to approximately 20,000 units in 2020.

Condominiums have been the most affected product category, with sales in 2020 dropping to about half of normal levels. The implementation of LTV measures in early 2019 had already begun to slow demand. Therefore, the number of condominium units sold this year is expected to remain stable, with estimated sales in 2021 around 28,000 units. The slowdown in launching new projects is expected to start replenishing market supply again from 2022 onwards, and the relaxation of lending restrictions for housing loans suggests that there is still a low possibility for condominium sales to grow back to pre-crisis levels, which were around 50,000 units.

The research department of Supalai Public Company Limited has estimated the sales behavior of the overall products (% Sold) in relation to economic growth (% GDP), which can be expressed in the following equation:

% Sold = 28.564 + 2.135% GDP
Adjusted R^2 = 0.422 S.E. of the estimate = 9.3062
F-Statistic = 20.726 Durbin-Watson = 1.211
Note: *, ** Standard Error

Under the assumption that GDP growth in 2022 will be 3 percent and there will be no new wave of Covid-19 infections, it is forecasted that the sales rate in the market will return to 34 percent, which is lower than in 2018 but slightly higher than in 2019, the year before the pandemic. However, historical data shows that additional supply each year from 2012 to 2019 was around 110,000-130,000 units per year. In a situation like 2022, supply is expected to be around 90,000-100,000 units. Based on model estimates, it can be predicted that sales could potentially return to 100,000 units again, indicating that the market is likely to revert to conditions similar to 2019 or the year before the outbreak.

The recovery of the residential market still faces challenges from Thailand's economic factors. Although growth is expected to improve slightly in 2022 at around three percent due to the reopening of the country to tourists and the full resumption of economic activities, the tourism sector, which was thriving before the Covid-19 outbreak, is still largely absent, with an estimated loss of about three-quarters of normal operations. This poses a risk that the economy and purchasing power may not return to average levels in the short term. Additionally, the inability of oil prices to rise further in 2022, or even decrease, will continue to exert negative pressure on international trade, despite exports remaining strong. These factors will proportionately impact purchasing power in the residential market as previously estimated.


Source: Research Department, Supalai Public Company Limited, *Estimated values


Source: Research Department, Supalai Public Company Limited, *Estimated values