The Bangkok condo market slowed in the third quarter of 2023, plunging to its lowest point for supply and demand since the third quarter of 2021, mainly attributed to rising interest rates.
Property consultant Knight Frank Thailand reported new condo supply launched in the third quarter of 2023 totalled 5,367 units, down 45% year-on-year.
The number of units sold during the period was 2,117, a 30% year-on-year decline.
Both supply and demand hit their lowest points since the third quarter of 2021, when 2,312 units were launched and 879 units sold.
Vichai Viratkapan, acting director-general of the Real Estate Information Center, said condo developers reduced new launches, particularly in the lower-end price segments, as buyers in this segment were severely affected by adverse factors.
"Negative factors, particularly rising interest rates, marred the purchasing power of the mass market," he said.
"Buyers in this segment also faced high rejection rates for mortgages, prompting developers to slow condo launches."
As the new launches decreased more than demand, the sales rate in the third quarter of 2023 improved to 39%, up from 31% in the third quarter of 2022 and 27% in the second quarter of 2023, according to Knight Frank Thailand.
Of the total new supply offered in the period, 76% was in Bangkok's suburbs, followed by the central business district with 16% and city fringe areas 8%.
By grade, 52% of new units were B grade, meaning a sales price of 80,000 to 149,999 baht per square metre, while 47% were C grade, or 79,999 baht or cheaper.
Only 1% were A grade, indicating sales prices of 150,000 baht or higher.
Potjaman Vorakitpokathorn, head of project marketing for Knight Frank Thailand, said the primary buyers of new condos in the third quarter were Thais, mostly in the high-end segment.
The number of foreign buyers was relatively modest, said Ms Potjaman.
"People buying units to live in preferred completed projects because they could inspect the units and review the layout before purchasing," she said.
Some opted to lease condos because of accumulated debt issues, leading to a recovery in the rental market, said Ms Potjaman.
This appealed to both permanent residents and returning international tourists in select areas, she said.
The average asking price for a new condo in the period decreased by 0.1%, said Ms Potjaman, attributed to increased interest rates and high household debt, which affected purchasing power.