The arrival of coronavirus (COVID-19) sent shockwaves across the world. While China went into lockdown, other countries switched onto high alert and swiftly an impact was felt on economies including Thailand.
2020 was already poised to be another tough year for the Thai property market. DDproperty data cemented this concluding that their Price Index had decreased 6% in the final quarter of 2019 while the Supply Index was also on a downward trajectory declining 8%.
- The Price Index reached its highest decrease in any of the last 8 quarters, find out more.
In fact, the Price Index drop was the biggest experienced in any of the eight previous quarters. A slowly recovering economy and high household debts were to blame for a sluggish residential market but the government introduced several stimulus packages in a bid to get the property market moving.
This included reducing the housing transfer and mortgage fees to 0.01% for those buying homes valued at THB3 million or less.
However, such incentives will not counteract COVID-19’s negative influence. Already there have been fewer transactions from foreigners, some overseas owners have requested to delay ownership transfers and not to mention some deposits being abandoned entirely. Foreigners are a big chunk of buyers of Thailand property with the Chinese making up a vast proportion of this.
Kamolpat Swaengkit, Country Manager of Thailand commented;
“The total ownership transfer values from the Chinese alone amounted to over THB20 billion, which is more than half of Thailand’s foreign purchasers. COVID-19 has prompted these buyers to withdraw their purchase despite losing their deposit. The absence of the Chinese will inevitably have a significant impact on our country’s property market.”
Developers and sellers have become reliant on this foreign injection but DDproperty has already noted that there has been a lack of condominium investors in the market. This has resulted in a stagnant condominium inventory and sellers trying to entice buyers with promotions and incentives.
At the same time landed home and those close to future mass transit lines have been performing well. These properties are purchased for owner-occupiers rather than speculative investors, which sellers may have been resting their laurels on for too many years.
DDproperty data reveals that the price for landed residential homes has increased by 12% in the last two years. Unsurprisingly the supply for this property type has been increasing too.
In conclusion, overall the Thailand property market has become quite complex. There are several factors influencing supply, prices and absorption rates and it is no longer a case that all property purchasers make for a lucrative investment.
More properties are being bought for end-users, in particular houses as opposed to condominiums, and new areas of Bangkok are enjoying healthy increases such as Don Mueang that is set to be the latest transport hub.
COVID-19 has been an unexpected twist for everyone, but its influence in Thailand could remain for a long time after it has passed and especially as the Kingdom very quickly felt the repercussions of reduced Chinese tourists in lieu of the outbreak.
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