Residential Housing Sales in Thailand Plunged 22.5% in 2023

The Real Estate Information Center (REIC), has reported new residential units sold in Thailand in the fourth quarter of 2023 fell 14.5% year on year, culminating in a 22.5% fall for the whole year.

According to Vichai Viratkapan, the centre’s interim director-general, there would be a supply-demand gap in Greater Bangkok’s residential market in the fourth quarter of 2023.

Supply increased by 13% year on year to 31,363 units valued at 240 billion baht, up 49%, while demand fell by 14.5% to 18,208 units worth 94.8 billion baht, down 19%.

“This led to a 13.7% surge in the number of remaining unsold units, marking the highest year-on-year increase in four quarters, totalling 209,894 units worth around 1.17 trillion baht, an increase of 26.7% in value terms,” said the official.

Because of increased supply and diminishing demand, the average absorption rate fell to 2.7% last year from 3.8% in 2022.

Condominiums accounted for 15,593 of the total new supply launched in the fourth quarter of 2023, at 95.6 billion baht, an increase of 16.2% and 111%.

Low-rise residences totaled 15,770 units valued 144 billion baht, up 10% and 25%, respectively.

The majority of the new releases were of units priced at 3 million baht or less, comprising 6,588 units, followed by those priced between 3.01-5 million baht per unit, totaling 6,056 residential housing units.

Bang Phli-Bang Bo-Bang Sao Thong in Samut Prakan sold the most apartments in the fourth quarter of 2023, totaling 2,315 units valued at 13.8 billion baht.

Next followed Nonthaburi’s Bang Yai-Bang Bua Thong-Bang Kruai-Sai Noi, with 1,711 units for 8.7 billion baht, and Samut Prakan’s Muang-Phra Pradaeng-Phra Samut Chedi, with 1,613 units worth 6.2 billion baht.

While Bang Yai-Bang Bua Thong-Bang Kruai-Sai Noi sold the second-highest number of units, it also had the biggest number of unsold apartments, with 20,271 units valued 103.3 billion baht, owing to the high number of new releases in that area.

Lam Luk Ka-Thanyaburi in Pathum Thani had the second highest number of unsold units (18,303 units valued 85.3 billion baht), followed by Bang Phli-Bang Bo-Bang Sao Thong (16,762 units worth 93.2 billion baht) and Pathum Thani’s Khlong Luang (16,558 units worth 61.4 billion baht).

“If the targeted economic growth is achieved, the market this year is expected to improve to the same level as 2022, which was the best year after the pandemic,” Vichai went on to say. “We anticipate demand will increase by 25% to 91,869 units worth 486 billion baht.”

Residential Housing Demand in Chiang Mai

Residential demand in Chiang Mai began to decline in the second part of 2023 and has continued through the first two months of this year, owing primarily to reduced spending power caused by the economic slowdown and increasing interest rates.

According to Soranand Sethi, president of the Chiang Mai Real Estate Association, the number of persons looking for properties in Chiang Mai through property marketplace Baania.com has plummeted from 53,336 in July last year to 39,817 last month.

“Despite optimism surrounding Chiang Mai’s tourism recovery, prospective homebuyers had lower purchasing power because of the economic slowdown, high household debt, increasing expenses, decreasing income and interest rate hikes,” said the official.

Given the unstable purchasing power of the resale market, many sellers of condo units, particularly those with one bedroom and fewer than 40 square metres in size, have reduced their prices by 17% in an effort to sell them more quickly, according to Mr Soranand.

Prices for two-bedroom units of less than 80 square meters have declined by 1.5%.

“There were discounts in the lower-end segment but not in the upper-end. “This indicates that purchasing power was low,” he remarked. “Rents also decreased while supply increased by 35%.”

According to these numbers, the economy is slow, and purchasing power has suffered severely, according to Mr Soranand.

He urged that the government employ stimulus to boost consumer spending.

According to the Real Estate Information Center (REIC), new residential unit sales in Chiang Mai fell 12.4% year on year in the second half of 2023, to 949 units for a total of 3.7 billion baht, a 7% decline.

New sales of low-rise dwellings fell 10.3% to 698 units worth 3 billion baht, a 5.8% drop.

REIC said that new condo sales fell by 17.7% to 251 units for 708 million baht, or 11.5%.

According to the centre, Chiang Mai’s residential housing inventory totaled 9,591 units valued 41.6 billion baht, an increase of 6.6% and 9.7%.

The inventory included 8,145 low-rise houses valued 37.2 billion baht, up 4.6% and 8.6%, respectively, as well as 1,446 condo units worth 4.5 billion baht, representing a 19% increase in quantity and value.

REIC also observed pricing competitiveness in low-rise residential housing projects, with modern designs and good after-sales services resulting in strong sales of units priced between 3-5 million baht.