According to the Real Estate Information Center (REIC), the confidence of developers continued to fall in Q1 2023 after two recent interest rate hikes. The developer index declined significantly in Q1 2023, dropping to 46.7 from 51.5 in the fourth quarter of last year.
The decrease may be due to a twofold increase in interest rates in the first quarter. The first was announced on January 25 with an increase of 0.25% to 1.50% from 1.25%, and the second — on March 28 with another increase of 0.25% to 1.75%. The index of housing developers in the first quarter was the lowest in seven quarters since Q2 2021, when it was 46.4. The historical minimum was in Q1 2020 at the level of 41.2, which coincided with the beginning of the pandemic.
The index of revenue, sales, investments and the launch of new phases or new projects in Q1 2023 decreased by - 10.8-3.5 points. However, the construction cost index increased by 3.7 points, as developers were more confident in the cost of construction. This was probably due to the fact that the growth of development costs remained stable.
REICH also reported an index of expectations or sentiment over the next six months, which improved to 61.4 in Q1 2023 from 60.5 in Q4 2022. The revenue, sales and investment expectations index rose from 2.4 to 4.9 points as a result of the economic recovery driven by the tourism sector and foreign investors.
However, developers still had concerns about employment, development costs and the launch of new stages or new projects. This was probably due to the fact that the Bank of Thailand did not extend the easing of the loan limits to the cost, which expired at the end of last year.