Thai property market under pressure from rising prices
Higher costs of land and construction pushing up condo prices for over eight consecutive quarters
Thailand’s property market is facing increasing pressure from escalating land and construction costs, leading to higher prices for new homes and condominiums, according to the Real Estate Information Center (REIC) report.
Over the past few years, the housing sector has seen continuous price rises, influenced by several factors, including soaring construction expenses and land value in prime locations, particularly in Bangkok along the BTS and MRT lines.
Data from the Real Estate Information Center (REIC) reveals that new housing estate prices in Minburi, Nong Chok, and Lat Krabang saw the sharpest increases in Q4 2024, while condominium prices in Huai Khwang, Chatuchak, and Din Daeng also saw significant hikes.
New housing estates saw a 0.8% price rise, the ninth consecutive quarter of growth, while new condominium prices increased by 3.6%, marking the eighth consecutive quarter of growth.
These increases are attributed to higher land, material and labour costs, which have pushed up prices for new projects, especially in high-demand areas of Bangkok and along the public transport network.
Regional variations in price increase
Condominium prices in Samut Prakan and Nonthaburi saw particularly high increases at 4.2%, outpacing the 3.4% rise in Bangkok.
Within Bangkok, the Huai Khwang, Chatuchak, and Din Daeng areas (3-5 million baht price range) saw the largest condominium price increases.
In the surrounding provinces, Samut Prakan, Phra Pradaeng, and Phra Samut Chedi (2-3 million baht) led price growth. Developers are increasingly using sales promotions, including cash discounts (up from 21.7% to 25.2% quarter-on-quarter), to stimulate buyer demand.
The new housing estate price index for Bangkok and surrounding areas reached 131.4 points, a 0.8% year-on-year increase.
Bangkok itself saw a 2.3% rise, contrasting with a 1% decline across Nonthaburi, Pathum Thani and Samut Prakan provinces, largely due to price reductions for townhouses.
Prices of detached houses rose by 2.1% year on year, while townhouses saw a more modest 0.3% increase. Cash discounts offered by developers for housing estates have also risen significantly, from 21% to 29.6% quarter on quarter.
Detached house prices in Bangkok rose most sharply in Minburi, Nong Chok, and Lat Krabang (over 10 million baht), while in surrounding provinces, Lam Luk Ka, Khlong Luang, and Thanyaburi (7.5-10 million baht) led price growth.
Townhouse price increases were highest in Phra Khanong, Bangna, Suan Luang, and Prawet (5-7.5 million baht) in Bangkok, and in Bang Kruai, Bang Yai, Bang Bua Thong and Sai Noi (2-3 million baht) in surrounding provinces.
Rising construction costs
The Standard Housing Construction Cost Index (HCCI) reached 139.9, a 4% year-on-year increase, reflecting continued rises in building material and labour costs.
Sanitary ware prices have risen by 12%, tiles by 5.6%, electrical and plumbing equipment by 3.7%, wood and wood products by 2.2%, and other materials by 5.7%, driven by global oil and energy price increases. Labour costs have also increased by 4%.
These rising construction costs are putting upward pressure on new housing prices at a time when consumer purchasing power is weakening due to slower economic growth.
It is anticipated that low-interest housing loan schemes from state-owned financial institutions will provide some stimulus to the market in early 2025
Source: https://www.nationthailand.com/business/property/40046048
