Thailand property market Q1 2024: A mixed bag with long-term potential

DDproperty Editorial Team
Thailand property market Q1 2024: A mixed bag with long-term potential
The Thailand property market in the first quarter of 2024 presented a fascinating snapshot of a market in transition. While there were positive signs of growth, particularly in the rental sector, there were also indications of a more cautious approach from buyers. This DDproperty Thailand Property Market Report Q1 2024 delves into the national and Bangkok market performance, highlighting key trends and offering insights for navigating the current landscape.

National sale market: Gradual growth, cautious demand

Nationally, residential property prices edged slightly upwards by 1% compared to the previous quarter and 2% year-on-year (YoY). This indicates a slow but steady growth trajectory.
However, the demand for properties has dipped by 14% and 25% respectively compared to the previous quarter and the same period last year. This suggests a more cautious approach from potential buyers, who might be waiting for a more pronounced economic recovery before committing to a purchase. For those considering buying soon, this cautiousness could present an opportunity to negotiate better prices.
Affordability remains a key driver, with 30% of DDproperty listings falling within the THB1-3 million range, catering to first-time buyers and budget-conscious investors.

Property For Sale

Condo for sale, Under THB3 million in Thailand

National rental market: A brighter spot with nuances

Compared to the sale market, the Thailand rental market offered a brighter picture in the first quarter of 2024. Rental prices for both non-landed properties (i.e., condos and apartments) and landed properties (i.e., single-detached houses and townhouses) saw positive growth.
Non-landed properties saw a significant increase of 7% quarter-on-quarter (QoQ) and 18% YoY, while landed properties rose by a more moderate 2% QoQ but a substantial 25% YoY. This indicates a growing preference for renting, potentially driven by the following:
– Preference for flexibility: Renting offers flexibility and a lower initial financial commitment compared to buying. This might be appealing to those with uncertain job prospects or lifestyle changes.
– Return on investment: The return of tourism and foreign investment could be driving demand for short- and long-term rentals in popular destinations.
However, a concerning trend emerged with the rental demand index decreasing by 27% QoQ and 25% YoY. This suggests a potential oversupply of rental properties, impacting rental yields for investors who might have focused on short-term rentals with higher turnover.
Investors may need to consider adjusting strategies toward attracting long-term tenants to mitigate risk. Long-term rentals can provide a steadier income stream with potentially lower vacancy rates. Also, investors might need to be more competitive with rent prices or offer incentives to attract tenants.
Notably, mid-range rental properties (i.e., with rental fees of THB10,000-30,000 per month) gained popularity, accounting for 44% of the total rental supply. This highlights a continued demand for value-for-money options in Thailand’s rental market.

Bangkok sale market: Price growth, especially in the city fringe

The property market in Bangkok mirrored the national trend with a 2% QoQ and 4% YoY price increase, indicating a modest but steady increase in property values.
Interestingly, the most significant price growth occurred in Bangkok’s city fringe and outskirt areas:
  • Bang Khen District: +16% QoQ
  • Bangkok Yai District: +15% QoQ
  • Lat Krabang District: +13% QoQ
  • Bang Khun Tien District: +9% QoQ
  • Prawet District: +6% QoQ
This trend suggests that these areas are becoming increasingly attractive due to potentially lower property costs compared to the city center. Investors may want to consider investing in these areas.
Currently, properties priced between THB5-10 million make up the largest share of available listings, accounting for 25% of the total supply. This signifies a market focus on affordability, offering options for budget-conscious buyers and those seeking mid-range properties.

Property For Sale

Condo for sale, Under THB10 million in Bangkok

Bangkok rental market: Pockets of growth amid overall decline

Bangkok’s rental market mirrors the national trend with rising prices but with a twist. While non-landed and landed properties saw a bump of 7% and 4% QoQ, respectively, the story is location-specific.
Areas boasting excellent connectivity are thriving. Districts near Skytrain, subway, and commercial areas witnessed significant rental price surges:
  • Nong Khaem District: +22% QoQ
  • Sai Mai District: +20% QoQ
  • Khlong Sam Wa District: +14% QoQ
  • Huai Khwang District: +10% QoQ
  • Din Daeng District: +7% QoQ
This trend highlights the enduring appeal of well-connected neighborhoods with easy access to amenities.
However, while rental prices are rising, there’s a noteworthy decrease in overall rental demand. The rental demand index has dropped by 33% QoQ and 22% YoY.
Moreover, the most popular rental price range sits between THB10,000-30,000 per month. This caters to a broad spectrum of renters, from young professionals to families seeking comfortable living spaces at a reasonable cost.

Market outlook: A balancing act

The Thailand property market in Q1 2024 presents a complex picture with both positive and cautious indicators. Here’s a closer look at the key factors influencing the current market and potential future scenarios:
– High household debt: A significant factor impacting the sales market is the high household debt level in Thailand. This debt burden makes potential buyers wary of taking on additional financial commitments, leading them to postpone purchases.
– Slow economic recovery: Thailand’s current economic recovery is gradual, and its future pace will significantly influence the property market. A robust recovery will likely boost buyer confidence and stimulate demand. Conversely, a sluggish recovery might prolong the cautious approach from buyers.
– High interest rates: High interest rates make property loans more expensive, further dampening buyer enthusiasm. A potential decrease in interest rates could incentivize more buyers to enter the market.
– Shifting preferences, rent vs. buy: The growing preference for renting over buying is driven by a desire for flexibility and avoiding long-term financial commitments in debt.
Despite the current slowdown, DDproperty Thailand Property Market Report anticipates a positive long-term trajectory for the Thailand property market. This optimism stems from the fact that both sales and rental demand indices remain higher than pre-pandemic levels. This indicates a continued underlying confidence in properties as a valuable long-term investment.
Remember, the property market is cyclical, and periods of caution can be followed by periods of strong growth. With careful planning and a long-term perspective, the Thailand property market can offer rewarding opportunities for all stakeholders-potential buyers, sellers, and investors alike.
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