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13 Mar 2023

Real Estate and Construction

Home sales, 2023: Remaining static or shrinking amid economic uncertainties, interest hikes and hefty household debts (Current Issue No.3387)


        There are additional positive factors seen in the Thai housing market during 2023. These include the resumption of economic activity, which has revived household income, and China’s reopening, which has not only supported tourism, but also shored up confidence among developers to resume investment in the housing market. Additionally, cuts in home ownership transfer and mortgage fees for properties under THB3 million have helped reduce expenses for home buyers. However, the housing market remains plagued by a number of factors. Among these are the global economic downturn, problems seen in several US banks, the protracted Russia-Ukraine war, uncertainties surrounding the Thai government’s policies after the general elections, and high home loan interest rates, which are expected to increase further.
        KResearch has conducted a survey on Bangkok residents’ views towards the current economic outlook versus their plans to buy homes over the next 1-2 years. The respondents have been asked the type of home they intend to purchase and at what price, plus whether or not their financial position and interest rate hikes will affect their home purchase plans. The sample covers all segments of wage earners, self-employed and business owners with stable income. The poll shows findings, as follows:
        Two-thirds of Bangkok city dwellers intend to purchase homes. Particularly, those in the workforce, aged 36 to 40, or Gen Y have the strongest desire to buy homes because they want to be independent.  
        More than half (66 percent) of the respondents intend to purchase brand-new homes, and 31 percent of the respondents plan to buy second-hand homes. The respondents intend to purchase a home costing approximately THB3.18 million on average, preferably a condominium unit, followed by a townhome.   
        The poll, however, shows that Bangkok residents are ready to change their home purchase plans in line with economic conditions, interest rates, plus their debts and savings. Such respondents are largely those with high debts per month and self-employed with uncertain income streams.
        As there are fewer factors supporting home purchases in 2023 while interest rates are trending higher amid weak purchasing power, we at KResearch are of the view that home purchases in the Bangkok Metropolitan Region (BMR) may reach approximately 95,000-101,000 units, a contraction of 2.8 percent or an increase of 3.4 percent YoY. The number of home ownership transfers in the BMR may total roughly 180,000-188,000, a contraction of 7.7-3.5 percent YoY.

Real Estate and Construction