The residential market in key northern provinces is reviving to pre-Covid levels following a recovery in tourism, which is boosting the local economy, though higher development costs remain a concern.
Soranand Sethi, president of the Chiang Mai Real Estate Association, said the economy in Chiang Mai improved thanks to a recovery in the tourism and retail sectors.
"We recorded a lot of foreign tourists in Chiang Mai compared with six months ago," said Mr Soranand, also vice-president of the Chiang Mai Chamber of Commerce. "This created positive sentiment and was a good sign for the property market."
According to the Real Estate Information Center (REIC), the number of newly sold residential units in Chiang Mai, Chiang Rai, Phitsanulok, Nakhon Sawan and Lamphun in the first half of 2022 totalled 2,203 units worth 8.17 billion baht.
The amount of units was close to the average before the pandemic, rising by 83% from the first half of 2021, while the value was much higher than the pre-pandemic average after increasing by 78% year-on-year, according to the centre.
"The number of new residential supply launched in the northern provinces also greatly increased as developers were more confident after tourism returned," said Vichai Viratkapan, REIC acting director-general.
There were a total of 2,470 residential units worth a combined 10.8 billion baht launched in the northern provinces in the first half of 2022, up by 4.2 times and six times year-on-year respectively.
The amount and value of the new supply was the highest in several years, even before the pandemic, according to REIC.
"Interestingly, the new residential supply launched in Lamphun was larger than in bigger provinces such as Phitsanulok, Nakhon Sawan and Chiang Rai," he said.
In Lamphun, there were 244 units launched and all of them were single detached houses.
They were located close to Saha Group Industrial Park–Lamphun, other industrial parks, the railroad or hospitals.
Chiang Mai was the largest housing market in the North with newly launched supply accounting for 50% of the total.
It was also the only province with new condo supply launched in the period, comprising 772 units, up from 30 units in the first half of 2021.
The number of units sold totalled 836, higher than the new supply launched.
"Recently there's been an increase in the number of Chinese coming to Chiang Mai for condo transfers," said Mr Soranand.
"Chiang Mai will be back to normal by the end of this year or early 2023."
A new town plan for Chiang Mai is being drafted, which will challenge developers because it will push affordable new low-rise houses to outer city areas, he said.
"Costs of housing development will increase with the new city plan, higher construction costs and inflation," said Mr Soranand. "Given these negative factors, potential buyers may be unable to afford a unit in preferable locations."