Developers would like the new government to provide special interest rates for first-time buyers and offer tax deductions to improve property purchasing power as housing units spike and interest rates continue to climb.
Saenphin Sukhee, chief executive of residential developer Frasers Property Home (Thailand), said residential prices have risen in response to cost increases, including a 30-50% uptick in land costs as well as a rise in construction costs.
"The higher construction costs do not include the pledged minimum wage hike by the political parties likely to form a government, which could increase to 450-600 baht per day," he said.
"This is a challenge as it will affect housing development costs."
According to the Real Estate Information Center (REIC), the price index of new low-rise houses available for sale in Greater Bangkok in the second quarter rose 1.1% to 129.7 from 128.3 in the first quarter. The index increased 1.9% year-on-year from 127.3.
"The increase in prices for low-rise houses were mainly in projects launched in 2021-22 as development costs were driven higher by the rising price of construction materials, land and wages," said Vichai Viratkapan, REIC's acting director-general.
The price index for new low-rise houses in Bangkok was 127.9, up 1.9% year-on-year and 1.5% quarter-on-quarter, while in Nonthaburi, Pathum Thani and Samut Prakan it was 130.5, up 1% year-on-year and 1.2% quarter-on-quarter.
The price index for single detached houses rose by 2.5% year-on-year and 1.6% quarter-on-quarter to 129.1.
For townhouses, the price index reached 129.9, a 0.8% increase year-on-year and a 0.2% uptick quarter-on-quarter. This index has gained for three consecutive quarters since the fourth quarter of 2022.
"With home development costs increasing by 7-10% annually, while salaries are only rising by 5% per year, people's ability to afford homes is gradually diminishing," said Mr Saenphin.
He said in the Phetkasem area homes used to cost 4-5 million baht for 60 square wah 30 years ago. The price for that size house now in Phetkasem is up to 7-8 million baht.
"The income growth of homebuyers is not keeping up with the rising cost of development," said Mr Saenphin.
"As a result, the opportunities for individuals with lower incomes to afford home ownership are sparser."
To help alleviate the burden of home instalment payments for buyers as prices elevate, expenses rise and the economy slowly recovers, the new government should provide special interest rates for the first one or two years for first-time buyers, he said.
"The Bank of Thailand should encourage commercial banks to be more flexible in granting home loans and consider reintroducing relaxed loan-to-value limits," said Mr Saenphin.
"Tax deductions are another incentive that could help boost home demand."