Builders turn to semi-detached housing projects as cost pressure hurts buyers

According to Vichai Viratkapan, Government Housing Bank director of the Real Estate Information Center, the market trend has shifted. With surplus supplies of townhouses that are affordable for middle-class income groups, more housing developers are turning to build semi-detached housing projects to tap the demand of buyers who normally look for single-unit homes.

In the first quarter of this year, 6,290 building permits (41.2%) were issued for townhouse units, down 10.4% compared to the first quarter of last year, while 4,992 building permits (32.7%) were issued for single-unit houses in the first quarter of this year, down 17.8% over the same period last year, and 3,233 building permits (21.2%) were issued for semi-detached homes, up 2.9% year on year, Vichai said.

"The cost of building materials has increased by 5-10%, resulting in an increase in construction costs. However, it is difficult to immediately and fully pass on the higher cost to consumers, as their disposable income has shrunk amid the rising cost of living today. Hence, more housing developers are turning to build semi-detached houses as a more affordable option for consumers who seek private living space than a townhouse at a cost of less than the price of a single-unit house," Vichai said.

The price of a single-unit house of about 50 square metres currently has increased to 7.5 million to 10 million baht from 5-7 million baht. Therefore, buying a 35sqm semi-detached house at a lower price, even with 15sqm less area, is acceptable to most middle-income buyers, Vichai said.

Soranan Setthi, president of the Chiang Mai Real Estate Association, said he has noticed signs of a shift back to semi-detached houses based on higher traffic in online searches. Land prices for single-unit houses have gone up sharply due to inflation, amid a surge in construction materials prices and labour costs. The cost of building a single-detached house has gone beyond the affordable level for most middle-class buyers.

"People prefer to live as smaller families, and semi-detached houses seem to fit their needs. Hence, real estate operators have started to shift towards building more semi-detached housing projects," Soranan said.

According to a survey, many low-rise housing projects are starting to include semi-detached houses in the project as an option for buyers who need some private living space within a tight budget, Soranan added.

Meanwhile, the worsening impact of global warming, such as the recent Asian heat wave, presents a new challenge for infrastructure and urban planners who are recommending extensive use of heat-absorbing materials in buildings and homes in Thailand.

High temperatures can cause damage to roads, buildings, and other infrastructure. More use of heat insulation materials to save rising electricity cost will further inflate construction costs in the future, according to Thailand Future Foundation, an institute that provides strategic recommendations to government agencies to help them formulate policies that fit the changing trends.