Thailand’s residential real estate market has been severely affected by the COVID-19 pandemic, which has limited domestic activities, business, and tourism. The market is expected to remain depressed until 2024, despite the strong predictions and plans of local developers. However, some factors could boost the market recovery, such as the easing of mortgage regulations, the country’s reopening, and the changing customer preferences.
The Impact of COVID-19 on the Residential Real Estate Market
The COVID-19 pandemic has had a negative impact on the residential real estate market in Thailand, as it has reduced the demand and supply of properties, especially from international customers. According to the Government Housing Bank’s Real Estate Information Centre, the number of newly developed apartments and houses dropped by 35% to 43,051 units in 2021, and the number of sold units decreased by 40% to 37,000 units¹. The average selling price declined by 5% to 2.6 million baht per unit.
The pandemic has also affected the rental market, as many expatriates and tourists left the country or reduced their spending. The occupancy rate of rental properties fell to 60% in 2021, compared to 80% in 2019². The rental prices also dropped by 10% to 15% on average, depending on the location and the type of property.
The market in 2022 was not optimistic, as the new variant of the coronavirus, Omicron, has emerged and caused another wave of infections and restrictions in the country. The research center predicted that the market will recover by 2023, but this may be delayed until 2024 due to the slow economic recovery, inflation, and low consumer confidence.
The Factors that Could Support the Market Recovery
Despite the gloomy scenario, some factors could support the market recovery in the next few years. One of them is the easing of mortgage regulations by the Bank of Thailand, which aims to stimulate the demand for residential properties. The new regulations allow borrowers a higher loan-to-value ratio, a longer loan repayment period, and a lower interest rate. These measures are expected to increase the affordability and accessibility of residential properties, especially for first-time buyers and low-income earners.
Another factor is the country’s reopening plan, which intends to revive the tourism industry and attract more foreign visitors and investors. The plan involves easing the entry requirements, expanding the travel bubble scheme, and launching hospitality and tourist programs in various provinces. These initiatives are expected to increase the demand for residential properties, especially in the tourist destinations and prime locations in Bangkok.
A third factor is the changing customer preferences in the residential real estate market, which reflect the impact of the pandemic on the lifestyles and needs of the customers. Customers seek more modern and luxurious properties that offer comfort, convenience, and security. They are also interested in properties that have unique features, such as smart home technology, eco-friendly design, and recreational facilities. Additionally, customers are showing a strong preference for rental properties, as they provide more flexibility and mobility than purchasing properties.
Thailand’s residential real estate market is facing a challenging situation due to the COVID-19 pandemic, which has reduced the demand and supply of properties, as well as the prices and occupancy rates. The market is expected to remain depressed in 2024, despite the strong predictions and plans of local developers. However, there are some factors that could boost the market recovery, such as the easing of mortgage regulations, the country’s tourist and visa easing plan, and changing customer preferences. These factors could create new opportunities and challenges for the residential real estate market in Thailand in the post-pandemic era.
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