Bangkok housing market to decline due to economic stagnation

New home sales in Bangkok will fall 10% this year and fall another 1-3% by 2025, due to the sluggish economy.

A visitor looks at deals on offer at the May 2024 House and Condo Show - Photo: BANGKOK POST

SCB EIC, the Research Center of Siam Commercial Bank, predicts new home sales in Thailand's Bangkok area will fall 10% this year, and continue to decline by another 1-3% in 2025, due to the sluggish economy.

In terms of value, the decline is estimated at 9% in 2024, but could stabilize at 0-2% next year, according to SCB EIC.

According to the Bangkok Post on October 25, the downturn in the housing market is due to economic challenges, including rising living costs, weakening purchasing power, high household debt levels, rising interest rates and stricter mortgage approval criteria.

These factors are causing potential homebuyers, especially those with low to moderate incomes, to delay their home-buying decisions.

In addition, SCB EIC also forecasts that the number of new residential apartments launched in 2024 will decrease by 28% compared to the same period last year, expected to recover in 2025 with a decrease of 2-4%.

To cope with this, real estate developers are focusing more on projects in the mid- and high-end segments, where purchasing power remains strong.

Amid tighter mortgage approval processes, major local banks reported a decline in mortgage lending in the first nine months of this year.

SCB, the fourth-largest bank by total assets and the industry leader in housing loans, reported a mortgage loan portfolio of 779 billion baht as of September 2024, down 15.5% quarter-on-quarter and 39% year-on-year.

Bangkok Post cited data as of September from Bangkok Bank (BBL), Thailand's largest bank, with a mortgage loan portfolio of 332 billion baht, down slightly by 0.6% quarter-on-quarter and 1.7% year-to-date.

Meanwhile, Bank of Ayudhya (Krungsri) saw its housing loan portfolio value fall to 248 billion baht, down 3% quarter-on-quarter and 7.6% year-to-date.

TMBThanachart (TTB) also reported a decline in overall mortgage lending, down 0.8 percent quarter-on-quarter and 2.2 percent year-to-date through September, according to a statement the bank released to the Stock Exchange of Thailand (SET).

Krungthai Bank (KTB), Thailand’s second-largest lender, was the only major bank to report growth in home loans. As of September, its mortgage loan portfolio reached 498 billion baht, up 1.5% quarter-on-quarter and 2.9% year-to-date.

However, Kasikornbank (KBank) did not disclose housing loan data in its financial statements to SET.

In response to the market situation, major local banks have announced comprehensive cuts in lending rates, including the minimum retail rate (MRR) used for housing loans.

Source: https://tuoitre.vn/thi-truong-nha-o-bangkok-se-suy-giam-do-tri-tre-kinh-te-2024102511230231.htm