Half a year has passed. How is Thai real estate?

..............Half a year has passed. How is Thai real estate? And the direction from now on into the second half of 2023 has been around for a while. During the period, Thailand encountered many challenging situations. Both the economic side is faced with the problem of inflation. Interest rates are rising The problem of high household debt Including politics that are currently in a period of government transition. For the Thai real estate sector, it is a business that must be continually monitored. Because it is a business with a very high market value. It accounts for more than 10% of the country's GDP, driving the economy through many related businesses such as construction. furniture business electrical appliances, decorations, including financial institutions

              Therefore, the real estate business Therefore, they are often affected by the political economy as well. Whether it be on the side of consumers, investors, including real estate development companies.

Look at the real estate situation Thailand in the first half of 2023

            The real estate sector has been hopeful since the beginning of the year. But when only the first half of 2023 has passed, the real estate market has not yet returned to much brightness. The Real Estate Information Center (REIC) reports that the Bangkok-metropolitan area and important provinces, totaling 27 provinces, with a total supply of 320,000 units offered for sale, with a total value of approximately 1.4 trillion baht.

           Only new units launched in the first half of 2023 amounted to nearly 65,000 units, a decrease of 11.6%, while the value was 270 billion baht, which also decreased 10.9% by real estate developers. Most of them focus on selling the same units as before. As well as waiting to see the new government policy. There are also plans to launch additional new projects in the second half of the year.

            Let's look at the demand side. Newly sold units in the first half of 2023 were approximately 57,000 units worth 258 billion baht, a decrease of 27.7% and 24.1%, respectively, in accordance with current market conditions that have not yet returned to much activity. Plus, there is the risk of the policy interest rate that the Bank of Thailand has announced to increase several times. making various financial institutions Gradually adjust accordingly. Affecting housing interest rates As a result, consumers who borrow money to buy a home must bear interest at a higher rate than before. and it is uncertain that it may be raised again in the next MPC meeting.

            This increase in interest rates results in higher monthly home loan payments. Some require longer periods of time to pay off. Many people have decided to postpone their home loan for a while.

            In addition, some consumers still face the problem of already high levels of household debt. Currently, Thai household debt is as high as 90% of GDP. People are more careful with their spending than ever before. Causing the real estate business to be inevitably affected. Especially in the residential group priced below 2-3 million baht, which are low-middle income level buyers.

                But on the other hand Buyers with high incomes did not experience much economic impact. For example, in the second quarter of the past, the overall number of ownership transfers of residences in the Luxuy group and above, priced at 7.5 1-10 million baht, increased up to 16%, as well as residences in the group priced at 10 million baht and above. Ownership transfer units increased 12.4%, with the value
of luxury homes also increasing.

               Or is it the condominium market? It was found that in the second quarter of the past, ownership transfer units for new condominiums in the price group of 2.01-3.00 million baht decreased by as much as 20.2%, but many people switched to buying second-hand condominiums in the same price range instead. because it is in a convenient location Get more usable space in the room, etc. It can be seen that consumers decide to buy housing by considering greater value for money.

               As for condominiums priced more than 10 million baht and above. Ownership transfers were found to have increased the most, reaching 52.4%, and second-hand condominiums at the same price level were at 33.3%. This is just an example that reflects the purchasing power of low-income consumers. Affected more than those with high incomes As a result, recently we have seen many developer companies turn to focus on developing more premium projects, such as luxury detached houses worth 10 million baht or more. or high-end condominiums

Direction of the Thai real estate market under the new government

             Thailand now officially has a new government. Led by the Prime Minister, Ms. Settha Thavisin, who is a real estate businessman. Therefore, the direction of the real estate business What will happen next? It is probably an important question that many parties would like to know.

             The first issue is confidence. After the government was successfully established Many parties feel more trustworthy. The economic situation and political stability appear to be in a positive direction. Under the leadership of the Pheu Thai Party that is leading the government this time. There are many policies worth keeping an eye on that will help make the household situation easier in the short term, such as stimulating the economy by 560 billion baht through the Digital Wallet, policies to reduce living costs, electricity bills, gas bills, and electric rail fares. , Policy to assist MEs and stimulate the Thai tourism sector Attracting foreign tourists to Thailand Free Chinese visa pass, etc.

             Before moving forward with policies to stimulate the economy in the long term, such as raising the minimum wage and salaries for new graduates, policies to encourage every household to have an income of at least 20,000 baht, pushing soft power and developing an innovative economy, etc., which must wait. Let's continue to see whether it is actually possible and successful or not.

                                                                                   Image source: Thairath Online

            There are also policies directly related to the real estate sector. There are many parties proposing that the government issue real estate measures. To help both consumers and entrepreneurs, such as

- Measures to relax the ratio of lending relative to the value of collateral (Loan to Value: LTV)
- Review the land and building tax structure
- Extend the period of measures to reduce transfer fees and mortgage fees
- Policy to encourage low-income earners to own homes own
- measures to stimulate purchasing power from foreigners Especially groups with high potential, etc.

            However, real estate measures It should be implemented in conjunction with other economic policies. to solve the problem of high levels of household debt Increase income for the people and control the cost of living If it can be done sustainably Whether it's the real estate business or any other business would be more cheerful The economy will likely see a brighter direction from now on.

Article by: Mr. Pat Panunan Content Creator - Real Estate

Reference information:
https://www.reic.or.th/Activities/PressRelease/185
https://www.krungsri.com/th/research/inustty/industy-utlook/real-estate/housing-in-upcountry/ io/io-housing-in-upcountry-2023-2025