Housing prices this year will remain flat as the market is forecast to be unfavourable, with an overwhelming number of unsold units and many developers seeking to cash in.
Tritecha Tangmatitham, managing director of SET-listed developer Supalai Plc, said construction prices this year would not change after experiencing significant increases over the past two years.
"The market conditions are unfavourable so developers will no longer compete for construction materials or lock a fixed construction price," he said. "Housing prices will remain flat as many developers require cash flow this year, despite declining margins."
One of the developers aiming to improve its balance sheet is L.P.N. Development Plc. It plans to use discounts to boost sales and revenue this year after recording a drop in net profit, revenue and presales in 2023.
According to Apichart Kasemkulsiri, L.P.N.'s chief executive, it has around 5,000 completed condo units remaining unsold, worth 11 billion baht, with a carrying cost of 4% per year.
That meant it had room to offer discounts of up to 4% for those units, though it might lead to a lower gross profit margin.
"A significant portion of our condo inventory resulted from the rejection rate, which reached 40% last year due to increases in interest rates," said Mr Apichart.
"Another reason was that our products might be less attractive compared to those of our competitors."
Last year, interest rates rose five times, each increasing by 0.25 percentage points to the current level of 2.50%, said Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC).
Consequently, housing demand declined, with newly released mortgage loans nationwide dropping by 2.8% to 678 billion baht in 2023 from 698 billion baht in 2022, which had risen by 14.1% from 2021.
The REIC also reported a year-on-year increase of 9.6% in the number of remaining units in Greater Bangkok as of the the third quarter last year, to 194,589 worth 1.08 trillion baht, reflecting a 24.1% rise.
The largest increase was condos with 74,108 units worth 350 billion baht, up 16.9% and 27.6%, respectively.
The number of remaining low-rise houses totalled 120,481 units worth 730 billion baht, picking up 5.5% and 22.5%, respectively.
According to the REIC, the price index of new low-rise houses available for sale in Bangkok, Nonthaburi, Pathum Thani and Samut Prakan in the fourth quarter of 2023 rose by 0.1% year-on-year to 130.3 and by 0.4% from the third quarter.
The year-on-year increase marked five consecutive rises since the fourth quarter of 2022, while the quarterly rise indicated three consecutive quarters since the second quarter of 2023.
By category, the price index of single detached houses grew 2.1% year-on-year to 133.8, marking an increase for six consecutive quarters since the third quarter of 2022.
However, the price index of townhouses dropped by 0.5% year-on-year and quarter-on-quarter to 128.7 as most of those in Bangkok were projects launched two years ago and most of those in other provinces lowered prices to match purchasing power.