The Chiang Mai housing market is expected to recover next year, but the government should implement measures to enhance home purchasing power, according to local developers.
Soranand Sethi, vice-president of the Chiang Mai Chamber of Commerce, said the Chiang Mai economy has gradually recovered, mainly driven by a revival in tourism.
"The tourism sector contributes significantly to Chiang Mai's income," he said. "Tourism in the province improved during the first half of the year, exceeding expectations, although it did not reach the same level as before the pandemic."
The recovery of the tourism sector enhanced financial stability among small and medium-sized enterprises, said Mr Soranand, also the president of the Chiang Mai Real Estate Association.
Alongside other positive factors, such as lower unemployment rates and stable inflation rates, housing demand in the province is on an upward trend. However, high household debt has a significant impact on obtaining mortgages, he said.
"Exports contracted for the past nine months while interest rates are high. Although the political situation calmed down, there remains a perception of uncertainty among foreigners," said Mr Soranand.
Chinese arrivals, a key driver in the tourism sector, are weaker this year because of restrictions by the Chinese government, he said. As a result, the property sector needs government measures to increase demand, Mr Soranand said.
Predikorn Buranupakorn, chief executive of Chiang Mai developer Ornsirin Holding, said measures are needed to attract foreigners for tourism and investment purposes, such as free visas or policies to encourage foreign property purchases.
"The prime minister has experience in the business and property sectors. All developers expect him to implement measures to promote the property sector," he said.
Mr Predikorn said local homebuyers are taking more time to decide on purchases because of high interest rates. Foreign demand is sluggish as the Chinese economy -- the main foreign buyer -- and its property market are in chaos, he said.
However, Mr Predikorn expects the property market to gradually recover next year, even if the Chiang Mai economy grows at a slow pace.
According to the Bank of Thailand's Northern Region Office, the region's economy is projected to have year-on-year growth of 2-3% in 2024, and 0.7-1.7% in 2025. The key driver is the industrial sector, which should expand by 15.9%, followed by the trade sector at 12.7%, said the central bank. Tourism is estimated to surge by 9.6% and property by 8.8%, but the farm sector is predicted to contract by 23.7%.
"Based on rising interest rates, construction costs and land prices, we will focus on product differentiation and expansion into other northern provinces, particularly those with strong foreign demand, as we have a strong presence in the foreign buyer market," Mr Predikorn said.