Thailand's real estate market will still be challenging in 2023, and apartment growth will be astonishing

Thailand's real estate market will still face challenges in 2023. Low-rise housing demand and purchasing power are generally stable. However, home buyers still need to pay attention to rising loan interest rates, rising house prices, and financial affordability without the support of government preferential measures for home purchases. Real estate developers and housing trading platforms are unanimously optimistic about the stimulating effect of the recovery of inbound tourism on the apartment housing market.

Although the number of inbound tourists in Thailand in 2022 has exceeded the official forecast and reached 11 million, the transaction volume and transaction value of the real estate market are still more contributed by domestic buyers. However, with the full recovery of Thailand's tourism industry and the optimistic outlook that it is expected to welcome back 5 million Chinese tourists this year, it is expected that the Thai real estate market will usher in two-way growth both internally and externally in 2023.

But for consumers who are planning to buy a house in the Year of the Rabbit, they must be prepared for several aspects of anti-risk. The first is that Bank of Thailand has collectively raised loan interest rates since the beginning of the New Year. At the same time, the Bank of Thailand also announced earlier that it will continue to implement the process of raising interest rates to ensure that inflation returns to the target range of 1-3%. This also means that loan interest rates have entered an upward cycle.

The second is that housing prices are expected to rise by about 5-10% compared with the previous year. This puts forward financial requirements for families preparing to buy a house. Therefore, it is necessary to ensure financial affordability in terms of loans. The central bank's current policy rate is 1.25%, and commercial bank lending rates will only rise and not fall.

Finally, neither the government nor the central bank has introduced new measures to stimulate the housing market. After the end of the central bank's LTV policy, the down payment ratio of the second house has increased significantly. Although the government has extended preferential measures such as mortgage fees and transfer fees until the end of the year, the measure only helps properties priced below 3 million baht.

But in any case, for the continuous influx of Chinese tourists, Thai real estate developers have rekindled hope, optimistic about the resulting wave of Chinese buying houses in Thailand. Even during the epidemic period, China's purchase of houses in Thailand has declined, but it still ranks first. Industry insiders predict that the housing market in Thailand is expected to grow by 1-2% this year, but the growth rate of the apartment market may be as high as 40%.

According to the latest version of the land price evaluation standard released by the Thai Finance Bureau, the Brilliant District, where the most Chinese people gather, has become the top 3 areas in Bangkok with the highest land price rise. Silom Road, Wireless Circuit, Sukhumvit Road and other core business districts will still have the highest land prices, with prices exceeding one million baht per wah, and housing prices in this area are also higher than other areas.