DDproperty Thailand Property Market Outlook 2022

In 2021, the real estate market became sluggish due to several factors, including the never-ending COVID-19 pandemic that has significantly impacted many industries, making for a challenging recovery. The pandemic has also directly influenced consumer purchasing power and increased household debt. As a result, consumers are now taking longer in deciding on their house-buying strategy.

Looking ahead to 2022, the real estate market is expected to recover. Overall, prices are forecast to remain the same. This is especially true for condominiums, which do not show signs of oversupply and continue to attract buyers. The factors that need to be observed are how well the government controls the spread of COVID-19 and economic stimulus measures, which could help the market recover.

The pandemic has effectively become one of the biggest and longest crises causing consumers to be mindful about spending for unnecessary items, as well as high involvement products such as property.

Government’s real estate measures, such as reducing transfer ownership fees and mortgages for properties under THB3 million and The Bank of Thailand’s (BOT) loan-to-value (LTV) measures introducing 100% mortgages in October 2021, have not helped much yet. Despite these incentives, consumers still lack purchasing power and remain uncertain about the pandemic and the overall economy.

Consequently, developers have postponed new project launches, particularly of condominiums, to focus on selling existing inventory using promotional campaigns and discounts. As a result, the Price Index for residential properties in Bangkok this year is decreasing.

According to the DDproperty Thailand Property Market Index, the Price Index of Bangkok residential property has been decreasing since Q4 2020. It decreased from 197 points to 190 points in Q1 2021, to 183 points in the following quarter, and to 178 points in Q3 2021. Overall, the Price Index decreased by 11% compared to the same period in 2020.

Despite the decline in overall Price Index, there has been some growth. The Price Index of landed residential properties shows positive signs, especially for single-detached houses, which increased by 6% from the previous year and by 13% from Q3 2019, before the COVID-19 outbreak.

Meanwhile, the Price Index of condominiums has slumped by 11% from the previous year and by 16% since the pre-pandemic period.

In Q1 2021, the Supply Index steadily increased from 399 points to 428 points, then reached 458 points in Q3 2021. Overall, the index rose by 19% from the previous year and by 25% from before the pandemic.

These reflect low absorption rates resulting from the extended period of economic slowdown, causing consumers to be wary of economic instability and, thus, delay buying property. Investors and foreign buyers have also disappeared from the market.

Over the past year, the area with the highest supply growth for condominium supply was Khlong Thanon Subdistrict in Sai Mai District, which had a staggering 323% increase. The locations with the highest supply growth for single-detached house and townhouse supply were Phlapphla subdistrict in Wang Thonglang district and Sam Wa Tawan Tok subdistrict in Khlong Sam Wa district, rising by 295% and 162%, respectively.

Categorising properties by prices, those under THB1 million recorded the highest growth, increasing by 78%. On the other hand, the THB1 to 3 million segment increased by 42%, while the THB5 to 10 million and THB10 to 15 million segments decreased by 1%.

According to DDproperty’s Thailand Consumer Sentiment Study, 71% of Thai consumers show interest in buying property but have postponed buying a house, with 39% planning to buy within the next one to two years. Financial instability created by COVID-19 is one challenge to investing in property as 63% of respondents had concerns over the property price, while 37% lacked confidence due to political instability.

Looking at age ranges, more than half of millennials (58%) have no plans to move out of their family home within the year. 49% want to be with and take care of their family, while 43% do not have enough financial support to climb onto the property ladder.

Even though the COVID-19 pandemic has significantly impacted the Thai economy throughout 2021, the Monetary Policy Committee estimates that the economy has passed its lowest point and that the country is taking steps towards economic recovery. The relaxing of COVID-19 measures, the reopening of the country, and the distribution of vaccines have all aided this. Nevertheless, the recovery rate still shows signs of uncertainty.

Overall, Thailand’s economy is forecast to grow by 3.7%, thanks to the increase in domestic spending rate and the recovering tourism industry.

Locations with the highest price growth are those near the MRT Purple Line route Bang Yai – Bang Sue. Bang Rak Noi subdistrict in Mueang Nonthaburi district increased by 17% and Bang Yai subdistrict in Bang Yai district rose by 9%.

Locations with the highest price growth over the year are situated near the Skytrain extension Khu Khot – Outer Ring Road. These include Khlong Hok subdistrict in Khlong Luang district increasing by 50% and Khlong Ha subdistrict in Khlong Luang district rising by 19%.

Locations with the highest price growth are those near the MRT Green Line (Samrong-Keha): namely Tai Ban Mai and Thepharak subdistricts both in Mueang Samut Prakan district, which increased by 12%. These locations also benefit from the upcoming Yellow Line (Lat Phrao-Samrong) that will be fully operational in 2022.

The real estate market is expected to recover in 2022. There are already positive signs of this in the last quarter of 2021, including the easing of COVID-19 restrictions, widespread distribution of vaccines, and overall economic rebound.

New supply is predicted to enter the market at the beginning of 2022 as developers and sellers offload their existing property to cater to consumers with strong purchasing power. Positive indicators are the easing of LTV measures and the reopening of the country.

Pricing remains stable from 2021, reinforced with the availability of promotional campaigns and discounts to encourage more sales.

Nevertheless, many challenges for the real estate market remain, including the prolonged COVID-19 pandemic, high household debt, strict requirements to secure a mortgage, and political instability.