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30 Dec 2021

Real Estate and Construction

Housing market in 2022 will be rife with challenges; despite increased supporting factors, market fundamentals remain highly fragile (Current Issue No.3296)


The year 2022 will remain another challenging year for the housing market. However, the market will be supported by measures for reduction of property ownership transfer and mortgage registration fees to 0.01 percent for residential units with price of up to THB 3 million – which will be extended to December 31, 2022 – will be a supporting factor to prop up the residential property market, following the easing of loan-to-value (LTV) regulations by the Bank of Thailand (BOT) in October 2021. As a result, the home buying activities in the market is expected to pick up beyond what was seen in 2021.
Nevertheless, the recovery of the housing market continues to depend mainly on the domestic spread of COVID-19. Close monitoring of the Omicron variant remains essential – for if there were to be a fifth wave that spans a long period, more time would be required for economic activity and households’ purchasing power to attain full recovery. At the same time, home sales and investment would be subject to pressure from market conditions that are fraught with risks and high volatility. KResearch thus projects that the number of residential property transfer in the Bangkok Metropolitan Region (BMR) in 2022 will likely amount to approximately 168,000-177,000 units, or growth of 1.8-7.3 percent, as opposed to a contraction of 16.1 percent estimated for 2021.
Regarding the investment trend for new residential properties in 2022, KResearch perceives that, while there may be an upswing in investment from real estate developers compared to 2021, the housing market  will contend with major challenges stemming from home buying activities which have yet to return to normalcy. Meanwhile, the amount of unsold housing units in the Bangkok Metropolitan Region remains high at around 200,000 units. Amid intense market competition among all types of residential property in all price ranges, ongoing liquidity issues, and increased construction costs, any potential investments will likely be made with caution in 2022 due to market conditions that are mired in uncertainty. KResearch is of the opinion that new launches of housing units in the Bangkok Metropolitan Region will be 60,000-66,000 units in 2022, lower than the pre-pandemic period, compared to the 2021 projection of merely 56,000 units. Developers are expected to focus more on sites in densely populated communities, primarily targeting upper-middle class customers.