Homebuyers urged to be more prudent
Homebuyers should have more financial discipline and readiness before buying a house as home prices are surging, interest rates are rising and property incentives have expired, says property website DDproperty.com.
Wittaya Apirakviriya, the website's general manager for Thai marketplaces, said residential prices this year are expected to rise by 5-10%, in line with higher interest rates and increasing development costs.
"Costs are rising, driven by inflation, higher minimum wages, fuel prices and construction materials," he said.
"This year the new land appraisal prices will be applied, which will have a direct impact on expenses from property transactions."
Naporn Sunthornchitcharoen, chairman of the executive committee at Land & Houses Plc, said land prices have risen by roughly 5% per year every year.
"With these rising costs, home prices this year will increase by 5%," he said. "As there has been a labour shortage since last year, we added a number of prefab contractors to support our business in 2023."
Mr Wittaya said homebuyers now pay higher monthly instalments for longer because of rising interest rates. They should consider their financial liquidity and exercise financial discipline before making a decision, he said.
The market is likely to be sluggish this year as property incentives ended last year, including the easing of the loan-to-value limit and a cut of transfer and mortgage fees to 0.01% from 2% and 1%, respectively.
According to DDproperty, the residential price index in Bangkok rose 1% in the third quarter of 2022 from the second quarter, but declined by 3% from the third quarter of 2021 and dropped 22% from 2019.
Only single detached houses posted a rise on the price index, up 6% year-on-year and 18% compared with the pre-pandemic period.
Meanwhile, the townhouse price index dropped 2% year-on-year and declined 3% compared with the pre-Covid period.
The condo price index in the third quarter was flat year-on-year, but shrank by 16% from the pre-pandemic period.
Locations with the largest increase on the price index were mainly outside the central business district, in Bangkok's outskirts, including Thawi Watthana and Taling Chan, with a year-on-year increase of 16% attributed to the mass transit Red Line.
Huai Khwang posted a rise of 7% for the period, while Din Daeng, Nong Chok, Nong Khaem and Phra Khanong picked up by 6%.
The rent index for low-rise houses in the third quarter last year rose, with single detached houses posting a year-on-year increase of 11% and 41% from the pre-pandemic period.
The rent index for townhouses rose 8% year-on-year and 11% from the pre-pandemic period, while that for condos dropped 1% year-on-year and declined 13% from the pre-pandemic period.
Locations with rising rents were along mass transit lines and near job sources, including Saphan Sung and Laksi, with a year-on-year surge of 11%.
They were followed by Klong Sam Wa and Bang Khen at 10%, Don Muang at 9% and Lat Phrao and Min Buri at 8%.