Developers should focus on strategies to reduce risks and drain unsold units priced at 1-3 million baht in the condo market, which faces challenges from weakened purchasing power and stricter lending conditions, threatening market stability.
Nattha Kahapana, managing director at property consultant Knight Frank Thailand, said the condo market is under pressure due to both declining purchasing power and stricter lending criteria from financial institutions.
"Although interest rates have decreased by 0.25%, they remain relatively unchanged overall, and the market is expected to continue its slowdown," he said.
The condo market in the fourth quarter of 2024 remains subdued, in line with the Bank of Thailand's (BoT) survey that projected a decline in housing loan demand in the next three months.
In 2025, personal incomes may gradually recover, potentially increasing housing loan demand, but not to normal levels. This reflects continued weak home loan growth and financial institutions' cautious lending practices based on borrowers' credit risk.
"The 1 to 3-million-baht condo market will be hit hardest by weaker purchasing power and stricter lending criteria. Developers must address these challenges and find ways to reduce risks in clearing remaining units," he said.
Meanwhile, new projects are launching at higher prices due to rising land costs, which creates a mismatch with the income levels of potential buyers, making affordability a key issue despite demand.
For projects with unsold inventory, developers may need to adopt sales-boosting strategies, such as flexible payment terms, low-interest rates or down-payment programmes with minimal upfront costs to motivate prospective buyers.
SLUGGISH Q3
The Bangkok condo market in the third quarter of 2024 remained sluggish, with a decline in condo transfers despite various stimulus measures.
"An improvement was seen in the second quarter, marked by a less pronounced decline in condo transfers. However, this trend reversed in the third quarter, even with measures supporting the property sector," he said.
Since April, the government has reduced mortgage registration fees to 0.01% for residential units priced at 7 million baht or lower, benefiting the mid-to-low-end condo market.
This segment, which accounts for 86% of the market, still faces challenges in securing loans. The overall economic slowdown has worsened this issue, with many buyers in this group increasingly relying on credit card loans for daily expenses, reducing demand for housing loans.
As a result, the condo market remained stable this quarter, with around 30,000 unsold units from completed projects.
SUPPLY DECREASE
The number of newly launched condo units in the third quarter dropped to 2,093, a 71.4% decline from the second quarter. Most of these units were priced 100,000 baht or more per square metre, with only 400 units priced below 80,000 baht per sq m.
Newly launched condos in Bangkok's inner city made up 12%, or 263 units. These projects focused on privacy and offered fewer units due to limited land availability.
Meanwhile, 28.6% of new projects were located in areas surrounding the city centre, with most priced at 120,000 baht per sq m or above.
The remaining 58.9% were in Bangkok's suburbs, where most projects are similarly priced at 120,000 baht and above per sq m, aligning with developments closer to the city.
This quarter's new supply reflected developers' confidence in targeting higher purchasing power segments, aiming to reduce risks associated with unsold inventory and potential loan accessibility challenges in the future.
SLOWING DEMAND
In the third quarter, new sales recorded a slowdown as they accounted for only 25% of the 2,093 units launched.
Additionally, sales in completed projects also declined, as reflected in the decrease in ownership transfers this quarter.
This was largely due to rising household debt, which particularly affected buyers in the real demand segment.
Many buyers in this group increased credit card or personal loan debt, limiting their ability to secure housing loans due to existing obligations.
In the third quarter, most new sales were Grade B projects, with approximately 7,000 units targeting buyers in the 3.5-7 million baht price range, who can afford instalments.
Projects ranging from 2.5–3 million baht were also popular, mainly among investors, while end-user buyers leaned more towards renting than purchasing.
Regarding unsold units, suburban areas had the highest unsold inventory rate at 64.7%, particularly in the zones defined as Bangkok East (Bang Na-Srinakarin-Ramkhamhaeng), North (Ngam Wongwan-Chaeng Wattana-Rangsit) and South (Charan Sanit Wong-Phetkasem-Bang Khae).
The area surrounding the centre of the city had an unsold inventory rate of 22.5%, covering the Phahon Yothin-Phaya Thai and Lat Phrao-Ratchada-Rama 9 zones. The central area had the lowest unsold inventory rate at 12.8%.
DECLINING PRICE
In the third quarter, condo asking prices overall decreased. In the central business district, the asking price was around 239,504 baht per sq m, down by 4.1% from the second quarter.
In areas on the fringes of the city, prices were around 123,216 baht per sq m, showing a slight decrease of 3.3% from the previous quarter.
Meanwhile, in suburban areas, condo prices were about 72,703 baht per sq m, reflecting a 5% increase compared to the second quarter.
On average, when examining asking prices across all areas, there was an overall decrease of 0.8%, indicating developers' efforts to adjust prices in order to clear unsold units from the market.