The Chairman of the developer Pruksa, Mr. Piya Prayong, highlighted the problems that the real estate market will face in 2023 due to the recent increase in interest rates. The increase in interest rates has led to a higher rate of loan refusals, especially for real estate worth less than 3 million baht. Along with rising construction costs and inflationary pressures, the growing price gap has negatively impacted the real estate sector. On the other hand, Ms. Kesara Tanyakornpak, Managing Director of Sun Development, suggested that the current interest rate hike may not have as significant an impact as originally thought. In this perspective, interest rates will rise earlier than expected in the second half of the year. Nevertheless, the situation still creates problems for potential home buyers.
After the meeting of the Monetary Policy Committee (MPC) on raising the discount rate by 0.25% to 2.0%, banks immediately gradually raised interest rates.
The Chief Executive Officer of Pruksa said that the rise in interest rates is one of the factors that will challenge the real estate market in 2023, which will lead to the emergence of inexpensive houses and apartments. However, for the purchase of real estate with a price of up to 3 million baht, there is an increase in the number of loan refusals.
Because of these trends, the real estate market over the past 2-3 years has forced developers to turn to the construction of middle- and upper-class housing, and not to houses and condominiums worth less than 3 million baht, which have problems with purchasing power. Pruksa has adjusted its strategy to match the situation, focusing on the luxury housing market at a price of 10-30 million baht to increase gross profit by 20%, for example, The Palm Bangna-Wongwaen project.
In the past, Pruksa had a much larger share of houses and apartments priced below 3 million baht and accounted for 70% of the portfolio. Therefore, they postponed the launch of the project and instead engaged in the release of the budget real estate fund.