Sales of new condo supply launched in Bangkok in the second quarter remained low as buyers continued to opt for units that are ready to move in to avoid mortgage rejections.
Tritecha Tangmatitham, managing director of SET-listed developer Supalai, said this year 70% of condo sales were completed units ready for transfer, which has been a trend since the pandemic, with customers increasingly choosing to buy such units.
"This market shift is due to customer concerns about mortgage loan approvals when purchasing presale condos as there may be a risk of loan rejection when the units are ready for transfer," he said.
Last year, sales of ready-to-transfer units accounted for 80% of total condo sales, whereas it was only 20-30% prior to the pandemic, Mr Tritecha added.
According to property consultant Knight Frank Thailand, the average sales rate of condo supply newly launched in Bangkok during the first quarter of 2018 to the fourth quarter of 2019 was 48% per quarter. From the first quarter of 2020 to the second quarter of 2023, it dropped to 32%.
During the first quarter of 2018 to the fourth quarter of 2019, the average quantity of condo supply newly launched per quarter was approximately 15,900 units, with an average demand of 7,700 units.
On the contrary, from the first quarter of 2020 to the second quarter of 2023, the average numbers were 7,970 units and 2,500 units, respectively.
In the second quarter of 2023, the number of newly launched condos tallied 11,930 units, the largest since the third quarter of 2022, a growth of 40% quarter-on-quarter and 21% year-on-year.
However, the sales rate in the second quarter of 2023 shrank to 27% from 42% in the first quarter as the number of units sold rose only 10% to 3,324 units.
Nattha Kahapana, managing director of Knight Frank Thailand, said the condo market in the second quarter remained stable, with new supply continuously added.
"But compared to the slowly returning purchasing power, demand recovery did not keep up with the supply due to sluggish demand in the lower-priced segment," he said.
As a result, the number of accumulated units remaining for sale in low-priced projects continued to increase. Since this group of buyers belongs to the middle-income category with limited liquidity, their loan applications incurred more risk of rejection.
The primary factors contributing to the middle-income earners not responding to the condo market were rooted in the fact that a significant portion of this demographic was in the phase of building their financial stability.
They typically had medium- to entry-level incomes, while price adjustments in the condo market had resulted in reduced affordability for this group when it comes to purchasing residential properties.
Another reason contributing to lower sales of new condos was buyers pivoting to the second-hand condo market as those are located in sought-after locations along transit lines, with suitable unit sizes and competitive prices.
Moreover, the growing number of buyers failing to meet loan obligations led to banks repossessing assets and categorising them as non-performing loans. This had notably boosted the presence of repossessed assets in the market, potentially fuelling positive trends in the second-hand property market.