The recent global outbreak of COVID-19 has affected all business types and has played a role in Thailand’s stagnating property market.
DDproperty Thailand Property Market Index assesses market conditions for the first quarter of 2020 noting that it has not significantly altered since the end of 2019 and is still at the mercy of economic challenges but is also suffering further from the global pandemic.
DDproperty’s Price Index has been continually shrinking since the beginning of 2019 and has continued on this trajectory for the first three months of this year reaching its lowest level since Q4 2017. The economic slowdown and high household debts remain at the forefront for this decline also forcing developers into a corner making it impossible to increase prices.
The introduction by the Bank of Thailand of stricter loan-to-value regulations has also weakened purchasing power and has contributed to declining condominium prices having shrunk by six percent over the last year. Developers have continued in gusto with strategies to dispose of their inventory running promotional campaigns and luring in buyers with attractive discounts.
The biggest impact COVID-19 is imposing on Thailand’s property market is the restriction of foreigners entering the country thus lessening the number of overseas investors. In 2019 Chinese nationals accounted for THB 28 billion of ownership transfers suggesting the sheer importance of this demographic. The market could suffer further without this injection particularly as other areas of the country’s economy have dampened, such as tourism and exports.
Developers will take heed of these challenges and will tackle supply by delaying new launches while concentrating on clearing any unsold inventory. This trend is confirmed by the report that revealed an eight percent decrease in supply since the third quarter of 2019 with all property types subject to this decline including townhouses which decreased for the first-ever time since the end of 2017.
Fortunately, Thailand has taken appropriate measures to overcome the pandemic. This combined with China now coming out of lockdown, there is hope that the opening of borders is on the horizon bringing with it more Chinese nationals looking to continue their property spending spree in Thailand. The country’s low property prices, high quality of living, and a good level of healthcare remain attractive factors to maintain the appeal and keep the momentum going.
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