According to Thailand’s Real Estate Information Center (REIC), rising property prices, interest rates, and diminished purchasing power will fuel demand for second-hand properties in desirable regions at more affordable prices.
The agency’s interim director-general, Vichai Viratkapan, stated that the economy drives supply and demand in the second-hand home market.
“The supply side is being bolstered by a rising number of second-hand residential properties from financial institutions and asset management firms,” he added. “This growth is prevalent amid the economic slowdown.”
Supply in the secondary market also came from condo units held by investment purchasers who previously had a large portfolio of rental properties and now wish to divest to diversify into other asset classes.
On the demand side, rising borrowing rates and construction costs for new homes limited purchasing power for desirable residential units. As a result, Mr Vichai believes that second-hand properties are the greatest option.
According to Kay Estate in Chiang Rai, most local clients shopping for used homes were in lower-priced categories with unit values of 1.5 million baht or less, as no new supply was released at these rates.
Second-hand homes in Thailand are a better choice for buyers seeking affordability in convenient locations, especially when new supply is offered at higher prices.” according to Kat Estate.
Many international buyers sought condos in inner-city regions, but a lack of land plots for new residential development forced them to settle for used units, he explained. These alternatives were not only less expensive but also larger.
The proportion of second-hand condos transferred to foreign buyers increased to 40% in the first nine months of 2023 from 37% in the second quarter of 2022.
Last month, the Housing Finance Association held the NPA Grand Sale 2023, introducing non-performing assets (NPAs) and second-hand properties from financial institutions and asset management organizations. The three-day event generated 1.17 billion baht in revenue.
According to a survey conducted at the event, condos were the most sought-after second-hand homes (36.7%), with the Chatuchak area, near Lat Phrao MRT station and the Yellow Line, being the most desirable location.
The most popular units were one-bedroom quarters ranging from 31 to 50 square meters in size, costing between 3-5 million baht.
Single detached houses (35.6%) were the second most popular residential choice in Sai Mai, Klong Sam Wa, and Bang Khunthian districts.
Buyers expressed interest in 50-60 square wah units with three bedrooms and two bathrooms priced between 3-5 million baht.
Townhouses (27.7%) in Sai Mai, Klong Sam Wa, and Prawet districts sized 16-25 sq ft with two floors, three bedrooms, and two bathrooms and priced less than 3 million baht came in third place.
Meanwhile, according to a ministry source who requested anonymity, officials in Thailand’s Finance Ministry urge that the government implement measures to enhance the property sector, which will stimulate the economy next year.
According to the source, the government should extend steps to lower ownership transfer and mortgage payments expiring at this year’s end. Policymakers propose extending the measures for another year.
Such initiatives aim to lower ownership transfer fees from 2% of assessed value to 1% for houses worth 3 million baht or less and mortgage registration percentages from 1% to 0.01% for mortgages worth 3 million baht or less per contract.
Furthermore, the ministry requested the Bank of Thailand to renew looser loan-to-value (LTV) limitations for mortgage lending, allowing homebuyers to take out loans of up to 100% for all home prices, as the property industry plays a dynamic role in fueling the economy.
Since the lower LTV limitations expired on December 31, 2022, obtaining house loan approvals has become more difficult.
Purchasers of first homes worth less than 10 million baht can obtain loans of up to 100% of the sale price and an additional 10% credit for décor, while second-home purchasers for dwellings worth less than 10 million baht can obtain loans of 70-90% of the purchase price.
The central bank enacted the LTV regulation to slow down artificial demand and property supply. According to the source, the ministry sees no signs of a property bubble in Thailand as long as interest rates stay high. As a result, there are little signs of speculation, and the ministry wants the central bank to reconsider lowering LTV limits, according to the source.