Thailand’s Property Market: Government Urges Immediate Action
Thailand’s property market is facing significant headwinds, prompting developers to call for urgent government intervention. Industry leaders are advocating for an extension of key stimulus measures and a relaxation of loan-to-value (LTV) limits to revitalize a market characterized by cautious buyers and tighter lending practices.
The appeal comes as the sector grapples with the lingering effects of a challenging 2024. Nuttaphong Kunakornwong, chief executive of publicly listed developer SC Asset Corporation, describes increasing buyer hesitancy, even among those financially capable of purchasing. This reluctance is exacerbated by financial institutions implementing stricter mortgage approval criteria, creating a double bind that hinders market activity. Mr. Kunakornwong notes, «Homebuyers with purchasing power are becoming more cautious, while financial institutions are tightening their criteria for mortgages.»
A major concern is the expiration of vital government incentives at the end of 2024. These measures, including reductions in transfer and mortgage fees, provided a significant market boost last year. Developers, such as Mr. Kunakornwong, urge their immediate reinstatement across all price segments, arguing this is crucial for reviving flagging demand. Echoing this sentiment, Chaiyan Charakarul, chairman of mid-sized developer Lalin Property Plc, stressed the urgency, stating that the government’s «consideration process shouldn’t take too long as we are already in the second month of the year.»
The downturn’s severity is reflected in stark statistics. Mr. Charakarul highlighted an 7.5% year-on-year decline in housing transfers within Greater Bangkok in 2024, totaling 81,580 units compared to 88,206 in 2023. This represents a staggering 34.7% decrease compared to pre-pandemic levels in 2019. While the condominium sector saw a modest 4.9% increase, this was largely due to presales from two years prior and partly driven by foreign buyers. The low-rise housing segment suffered a more substantial impact, with transfers plummeting by 20.6%.
Further context is provided by Artitaya Kasemlawan, head of residential sales at consultancy CBRE Thailand, who points to the difficulty potential buyers face in securing mortgages as a major factor contributing to the slump. This has led to a concerning increase in unsold inventory, particularly in the low-rise housing segment, which has seen a steady annual increase since 2019, reaching 155,000 units by the end of 2024. While new supply is expected to fall to its lowest level in over a decade in 2025, the issue of unsold inventory remains a significant concern. Ms. Kasemlawan suggests that an interest rate cut of up to 1% could significantly improve affordability and stimulate demand.
Beyond extending existing stimulus, developers also advocate for a reassessment of LTV limits, particularly for second and third-home buyers. Mr. Kunakornwong argues that while these limits were initially designed to curb speculation, the current market necessitates a more flexible approach. He contends that easing these restrictions across all price ranges would facilitate transactions and help clear the existing surplus inventory. «The LTV limits are intended to prevent speculation, but now there are no speculators in the residential market,» he stated.
The industry’s plea to the government highlights the significant challenges facing Thailand’s property sector. The coming months will be critical in determining whether government intervention can successfully reignite market activity and alleviate the concerns of developers and potential homebuyers.
