High levels of household debt, rising interest rates, and declining purchasing power are sending shivers through Thailand’s housing market.
Limited demand for housing will last for the rest of this year, a report by Kasikornbank Research Centre said. A 7.8% contraction in sales could occur in Bangkok and its suburbs this year, compared to last year, it said.
Housing sales have been on a downward trend since the beginning of the year, the research centre said.
This has happened despite foreign nationals returning to buy condominium units, as well as a reduction in fees and mortgages for homes priced below 3 million baht.
The market has already absorbed pent-up demand from the pandemic, especially when the loan-to-value criteria were relaxed.
Consumer purchasing has yet to fully recover from the pandemic, household debt remains high and interest rates on housing loans are rising.
This means higher monthly instalments and tighter credit limits, the research centre said. Rate rises from September 2022 to July of this year have led to an average increase in monthly instalments of about 13%, it said.
During the first seven months of 2023, booking purchases for residential properties in the Bangkok metropolitan area contracted by about 12% from 2022, while property transfers during the first half of the year contracted by about 3% year on year.Source: The Nation
