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How Rising Interest Rates and High Land Prices Impact Thailand's Real Estate Market
The Thai Condominium Association has described 2024 as a particularly challenging period for the real estate market. Rising interest rates and high land prices have significantly hindered consumer access to mortgages. These issues, exacerbated by geopolitical tensions and a strong Thai baht at the beginning of the year, have had the greatest impact on the mid- and low-priced housing segments.
Preliminary data suggests that sales in 2024 will decline by 25%, with many segments reaching record lows. Property ownership transfers fell by 8% in the first nine months of the year. However, the completion of new buildings in Q4 increased the total value of transferred real estate by 87 billion THB ($2.5 billion), matching the combined volume of the previous three quarters. Despite this, the annual figure is expected to decline by 5-7%, while new mortgage lending volumes are projected to drop by approximately 7%.
Experts believe that the sales downturn in 2024 will affect revenue recognition over the next 1-2 years. However, international buyer interest has provided some stability, particularly in major tourist destinations such as Phuket, Chonburi, Chiang Mai, and Bangkok. Foreign investments have helped offset the decline in domestic demand.
The Condominium Association forecasts a market recovery in 2025, with expected sales growth of 5-10%. However, high interest rates continue to limit purchasing power for middle- and low-income buyers. To revive the market, the association has urged the government to lower interest rates to stimulate domestic purchasing power. Additionally, a clearer policy on foreign investment and tax collection could support both economic growth and improve housing affordability for local buyers.
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