What is happening with housing prices in Thailand?
In the third quarter of last year, the value of Thai residential real estate decreased by 2.64% year-on-year (adjusted for inflation). Prior to that, a drop in prices was also recorded in the second and first quarters by 2.25% and 1.48%, respectively. In quarterly terms, the cost of houses and apartments has not changed much.
Demand and construction
According to the information of the Bank of Thailand, during the first three quarters of last year, the cumulative price of purchase and sale transactions of land and buildings recorded in the country fell by almost 35% compared to the first three quarters of 2021. This figure reached 560.65 billion baht ($15.96 billion). All Thai regions have experienced a decrease in the number of sales.
According to the Bank of Thailand, during the first three quarters of 2022, the number of registered condominiums in the country decreased by 3.8%, reaching 38,687 objects. In the previous year, this indicator decreased by 41.8%.
Profitability of Thai housing
As for the profitability of residential real estate, consider as an example a two-bedroom apartment with an area of approximately 120 m2, located in the central part of Bangkok. Such an object can be purchased for 11.64 billion baht ($347,360) and leased for 44.11 thousand. BAHT ($1,310). Thus, the annual return on investment (ROI) is 4.55%.
The state of the Thai economy
In the third quarter of last year, the Thai economy managed to grow by 4.5% year-on-year. Growth was also recorded in the second and first quarters by 2.5% and 2.3%, respectively. The driving factors of this trend were high private spending, investment inflows and the recovery of the tourism industry. In the previous year, this indicator reached only 1.6 percent growth, becoming one of the lowest in the countries of Southeast Asia.
According to the forecasts of the Bank of Thailand, Thai GDP is expected to grow by 3.7% during 2023 after 3.5% growth last year.
In November last year, the Bank of Thailand announced an increase in the base interest rate to 1.25% (by 25 basis points) to contain inflationary pressure, which in August reached a 14-year high (7.86%). This was the third increase in the last four years. Thanks to this decision, inflation decreased by 5.55%.