Thai real-estate market slumps in first quarter

Real estate showed signs of crisis in the first quarter, with sales and transfers all negative.

In the first three months of 2024, the Thai real-estate market experienced a sales decline of 25-30%, marking the lowest point in six years. The townhouse market saw its lowest sales in 12 years, since the flood crisis in 2011. 

Additionally, transfer volumes were down across all sectors, marking the first time in 30 years that this has occurred. This reflects the weakened purchasing power of Thai consumers.

"Thai real estate is considered global property, with foreigners viewing it as having good infrastructure, schools, amenities, and friendly people. This has led to 25% of the 1 trillion baht real-estate market value being purchased by foreigners in the past, often as a second home or vacation home,” said Prasert Taedullayasatit, president of the Thai Condominium Association. 

“This represents a good opportunity to use the real-estate sector to help stimulate the economy along with the tourism industry. Therefore, it is time for Thailand to organise the entire process from start to finish." 

Prasert noted during a seminar titled "Dissecting the Hot Issues in Real Estate: Where Are We Headed in the Second Half?" that real estate can be a key driver in restructuring the economy, second only to tourism. Therefore, it is advisable to develop a model similar to those of Singapore and the Middle East by creating large-scale, man-made real-estate projects. 

This would enhance competitiveness and attract investments, thereby stimulating long-term economic growth. Given Thailand's geographical advantages, he believes that Thailand can compete with Singapore.

For short-term measures to stimulate the economy, he proposed temporarily suspending LTV (loan-to-value) measures on a year-by-year basis. Once the economic situation normalises, the LTV criteria should be adjusted to apply to the third house of Thai citizens, particularly in the lower-middle market segment. 

Additionally, it is suggested to push for and adjust the condominium ownership regulations for foreigners, increasing the limit from 49% to 69% on a voluntary basis in buildings where foreign ownership has already reached 49%.

In the long term, the proposal includes restructuring the economy by enhancing competitiveness within a legal framework. This also involves establishing a fund to assist low-income individuals who wish to own a home.

"It is expected to take two weeks to consult with the Housing Development Association and the Thai Real Estate Association before presenting to the relevant government agencies," Prasert said. “This consultation aims to unlock various restrictions, allowing the real-estate sector to play a significant role in stimulating the country's economic recovery."