The land price index in Greater Bangkok for the third quarter of 2023 increased 3% year-on-year, the lowest growth rate in seven quarters.
Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC), said the previous low for growth was in the fourth quarter of 2021 at 1.7%, which was the smallest in more than a decade.
"Several negative factors affected land transactions, particularly the interest rate hike to 2.5% as of Sept 27, the fifth uptick this year," he said.
Two other factors hampering home purchasing power were loan-to-value limits returning to normal levels early in the year and household debt exceeding 90% of GDP.
"Residential developers postponed their plans to launch new projects. They might also delay the purchase of vacant land for future development," said Mr Vichai.
With no massive reduction in the land and building tax this year, demand among developers to accumulate land has decreased, he said.
"The acquisition and retention of land now incurs taxes, making it more costly, which could translate into expenses for future project development," said Mr Vichai.
According to the REIC, the price index of vacant land in Greater Bangkok was 379.9 in the third quarter of 2023, up 0.9% from 376.5 in the second quarter.
Despite the quarter-on-quarter growth, it remained below the five-year average of 4.1% during 2015-19.
Year-on-year growth declined for two consecutive quarters, with a rise of 6.2% in the second quarter from an increase of 13.1% in the first quarter, noted the centre.
In the third quarter of 2023, the largest year-on-year increase in the price index of vacant land was in Nakhon Pathom at 62.5%, followed by Bang Phli-Bang Bo-Bang Sao Thong with a rise of 22.3%, and Muang Samut Prakan-Phra Pradaeng-Phra Samut Chedi at 17.9%.
These changes indicate land price increases in suburban Bangkok areas were higher than those in inner Bangkok because of significant development plans in Bangkok's neighbouring provinces, he said.
Moreover, land prices in suburban areas remained relatively affordable, making them feasible for residential development, particularly for low-rise houses, said Mr Vichai.
This aligns with demand from potential homebuyers seeking affordable housing in those areas, he said.
"In the first half of 2023, these zones had a large number of residential projects newly launched and posted high volumes of new sales," said Mr Vichai.