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17 Mar 2023

Econ Digest

Housing market in 2023…Respondents intend to purchase homes, but will change their plans in line with economic conditions

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        There are additional positive factors seen in the Thai housing market during 2023. These include the resumption of economic activity, which has revived household incomes, and China’s reopening that has not only supported tourism, but also has 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 also helped reduce expenses for home buyers. However, the housing market continues to be plagued by several factors. These include the global economic downturn, problems seen in several US banks, the protracted Russia-Ukraine war, the uncertainties surrounding the Thai government’s policies after the general elections, and the expected further increase in high home loan interest rates. KResearch has conducted a survey of Bangkok residents’ views of the current economic outlook on their plans to buy homes over the next 1-2 years, and came up with the interesting results as follows:

  • Two-thirds of respondents 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.  The second important reason is to expand their own family and live close to work or school.
  • More than half (66%) of respondents intend to purchase brand-new homes and 31 % of the respondents plan to buy second-hand homes. Respondents intend to purchase a home costing approximately THB3.18 million on average, preferably a condominium unit (38%), followed by a townhome (27%).   
  • Respondents are ready to change their home purchase plans in line with economic conditions, interest rates, plus financial readiness such as monthly debts and savings in case of emergency. Such respondents are largely those with high monthly debts and self-employed persons with uncertain income streams.

        As there are fewer factors supporting home purchases, such as the Bank of Thailand’s (BOT) decision to stop extending loan-to-value (LTV) relief measures to 100%, rising interest rates and weak purchasing power, KResearch holds a cautious view over transactions in the housing market. KResearch projects that home purchases in the Bangkok Metropolitan Region (BMR) may reach approximately 95,000-101,000 units, a contraction of 2.8% or an increase of 3.4% YoY. The number of home ownership transfers in the BMR may total roughly 180,000-188,000, a contraction of 7.7-3.5% YoY. Condominiums located in the outer area of Bangkok with mass rapid transit connections that are priced less than THB3 million are expected to recover well.

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