To avoid an oversupply, the government should support foreign buyers purchasing residential units with measures to counterbalance the shortfall in domestic demand, says Thailand Development Research Institute (TDRI).
Nonarit Bisonyabut, senior research fellow at TDRI, said the government could allow foreigners to bid to purchase residential units.
This method can attract their interest and limit the amount acquired by foreigners, who usually have higher purchasing power than Thais, he said.
The number of units being offered for bids by foreigners should match the decrease in local demand, he said.
"Supposing demand shrinks from 10,000 units, the government may offer that number for bidding," said Mr Nonarit. "This can also protect affordability for Thai buyers as bids from foreign buyers are likely to be higher than Thais."
TDRI forecasts residential demand this year would fall to 334,530 units from 392,516 units last year. It would improve to 372,675 units in 2021 and 403,138 units in 2022.
Mr Nonarit said the pandemic would weaken purchasing power in property market by a total of 900 billion baht during 2020-22, mainly due to the economic slowdown and the country's ageing population.
He said 2020 will be the first year that purchasing power among potential buyers is reduced.
Nonarit: Thai buyers to be protected
Household debt has risen to 86% of GDP, up from 79% last year. As the Thai population declines, unsold housing supply will rise.
Stimulating property demand among foreign buyers will help prevent oversupply, said Mr Nonarit.
One of the easiest ways is to increase foreign ownership quotas for condos from 49% to 60-70% in specific locations where unsold supply exceeds demand.
The government should extend the leasehold period for low-rise houses from 30 years to 30 years plus 30 years of secure ownership or 50 years in one registration, he said.
"Housing demand will take a few years to resume to the same level as 2019," said Mr Nonarit. "A recovery will be seen in those related to government sector, wealthy people and purchasing power from each business except tourism."
He said many people are worried about the impact of the pandemic in 2021.
The most looming concern is a prolonged global recession (58.5%), followed by high unemployment (43.8%) and another outbreak (40.1%).
Other concerns included weakened major economies (39.2%), industries' failure to recover (35.4%), more bankruptcies and consolidation (35.2%), more restricted travel and trade movement (34%), the emerging market collapse and prolonged supply chain disruption (33.7%), according to the World Economic Forum.
"With an estimate of 2.7 billion vaccine doses available within 2021-22, at two doses per head and the number of global tourists at 1.4 billion, half of all tourists will be back next year," he said.