The index of land prices in Greater Bangkok in the second quarter dropped from the first quarter due to the economic slowdown, marking the second quarterly decline since the index was introduced in 2012, with the first decline occurring in the first quarter of 2021.
Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC), said the land price index in the second quarter of 2023 was 376.5, up 6.2% from the same period last year, but down 2.4% from the first.
"The quarterly drop in land prices was derived from property market slowdown, dampened by several negative factors," he said. "The first-half economic growth was lower than expected."
Other significant factors included the expiration of the easing of the loan-to-value limits, high household debt which stood at 90% of GDP and an upward trend in interest rates.
These factors led to the decline in the affordability and purchasing capacity of residential properties for the public, causing a slowdown in residential property purchases.
As a result, developers postponed plans to launch new projects from this year until 2024. It resulted in the delay of vacant land purchase for property development in several locations, he said.
"The collection of the land and building tax at full rate this year prompted businesses to readjust their land acquisition plans to accommodate future project developments," said Mr Vichai.
Consequently, the demand for accumulating land as a land bank has diminished, as businesses seek to manage the cost burden arising from land ownership, primarily from the land and building tax, which constitutes a significant cost factor in the development of projects.
The increase in the land price index in the second quarter remained lower than the five-year average rate before the pandemic between 2015 and 2019 which stood at 14.8%.
The top three locations with the largest year-on-year increase in the land price index were Bang Phli-Bang Bo-Bang Sao Thong in Samut Prakan with a rise of 54.9%, Samut Sakhon (26.1%) and Muang-Lat Lum Kaeo-Sam Khok in Pathum Thani (17.6%).
Next were Ratburana-Bang Khunthian-Thung Khru-Bang Bon-Jom Thong (17.5%) and Muang-Phra Pradaeng-Phra Samut Chedi in Samut Prakan (11.4%).