The housing market priced under 3 million baht in Bangkok and its vicinity is facing multifaceted challenges, including demand pressures from economic factors that have led to a high Rejection rate. Additionally, supply-side issues arise as developers strive to maintain profit margins amidst continuously rising project development costs and accumulated unsold units.

  • Units transferring ownership priced under 3 million baht in the BMR account for an average of about 2 out of 3 of all transfer units in BMR. In terms of transfer value, they represent about 1 in 3 of the total transfer value in BMR. Currently, over 85% of both the transfer units and transfer values in the housing market priced under 3 million baht in BMR come from transfers of condominiums and townhouses.
  • The housing market priced under 3 million baht in BMR, which is primarily driven by Real demand, is showing signs of slowing down due to economic factors such as living costs and household debt, which continue to pressure purchasing power, especially among the middle to lower-income groups that are the main buyers in this market. This trend is expected to persist for at least the next 1-2 years. Furthermore, interest rates and access to credit constraints are likely to keep the rejection rate high. Meanwhile, demand for investment properties for rental is also pressured by LTV measures.
  • Transfers of second-hand housing priced under 3 million baht are on the rise due to the continuous increase in first-hand housing prices driven by development costs. Additionally, future housing options priced below 3 million baht are likely to be located further from the city, smaller in size, or with reduced specifications due to rising land costs, which poses a significant challenge in attracting buyer interest, particularly in the first-hand market. Current buyers are increasingly prioritizing locations that allow for convenient access to the city or are closer to urban areas.
  • Maintaining profit margins from developing low-cost housing is becoming more challenging for developers due to continuously rising project development costs, particularly land prices. The new urban planning will further accelerate land prices in the city. If developers attempt to reduce costs by decreasing usable space, they risk making sales more difficult.
  • Additionally, it is essential to monitor the situation regarding accumulated unsold units of condominiums and townhouses priced under 3 million baht in BMR, particularly in densely populated areas where absorption rates may decline due to slowing purchasing power, especially among townhouses that face decreasing popularity and competition from similarly priced condominiums.

However, SCB EIC believes that housing priced under 3 million baht in Bangkok and its vicinity still has demand from middle to lower-income groups. Strategies for developers to attract limited purchasing power include assisting buyers in securing loans, planning project developments, managing costs, and collaborating with partners.

  • Housing priced under 3 million baht, especially in the condominium segment, remains in demand among middle to lower-income earners (below 50,000 baht/month) as it meets the need for convenient commuting. Condominiums priced between 2-3 million baht continue to see high demand as they are located in mid-tier areas of Bangkok or near certain stations of the green or blue subway lines. Additionally, second-hand housing priced under 3 million baht is expected to remain popular due to its proximity to the city at lower prices compared to first-hand purchases.
  • Condominiums priced under 3 million baht will have greater opportunities in mid-tier and outer Bangkok areas, which will serve as Nodes where condominiums priced under 3 million baht will expand from these points in the future, following urban expansion and new subway lines, as well as new urban planning that is likely to support condominium development in mid-tier and outer Bangkok areas. Locations with potential include the northern part of Bangkok expanding from the Rattanathibet zone, the western part of Bangkok not far from the Sathorn area, and areas close to the blue subway line.
  • Strategies for developers to attract limited purchasing power and cope with the housing market situation priced under 3 million baht in BMR, which is expected to continue slowing down, include: 1) Assisting buyers in securing loans, such as providing knowledge, consulting, planning, and finding solutions; 2) Planning the launch of low-priced projects more cautiously, such as delaying launches in risky areas and only opening projects in locations with potential; 3) Managing costs and building partnerships.

Read the full report at... https://www.scbeic.com/th/detail/product/house-under-3-million-baht-060824