The housing market outlook remains hazy for the first quarter as both developers and homebuyers lack confidence in performance and purchases, dampened by elevated interest rates.
Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC), said both supply and demand were affected by higher interest rates, which were hiked several times last year to a policy rate of 2.50%.
"Developers face higher financial costs, while homebuyers' purchasing power declined, ultimately affecting developers' revenue," he said.
The REIC surveyed housing demand in Greater Bangkok in November last year at the House and Condo Fair, asking 500 respondents to assess sentiment.
The index in the fourth quarter of 2023 was 44.5, improving from 41.2 in the first nine months, but remaining lower than the median of 50, which indicates homebuyer sentiment is still low.
"The low confidence likely derived from the sluggish economy, affected by several negative factors, particularly rises in interest rates, which are expected to remain at this level for a while," said Mr Vichai.
In addition, the Bank of Thailand does not intend to ease lending curbs as household debt levels have ballooned.
These factors weighed on home purchasing power and homebuyers' confidence in purchasing homes, as they are concerned about being rejected for a mortgage, noted the centre.
The survey found 46% of respondents were age 25 to 34, while 60% were employed. Some 35% of respondents earned between 15,001 and 30,000 baht per month.
Roughly 36% of respondents, up from 28% in the first nine months, wanted to buy a house to live in, while buying for investment dropped to 15% from 18%.
Key factors for buying were convenience for travel (12.6%), followed by buying for rent or speculation (12.4%).
People wanting to buy a new residence rose to 41.5% from 31.1% in the first nine months, while people wanting second-hand properties increased to 6.9% from 5.4%.
The most popular price range was 2.01-3 million baht (29.7%), followed by 3.01-5 million baht (26.1%).
Some 42% wanted to buy single detached houses priced between 3.01-5 million baht, followed by condos priced 2.01-3 million (34.1%), townhouses priced 2.01-3 million (16.5%) and duplexes priced 5.01-7.5 million (7.6%).
"Duplexes, which garnered the most interest, had higher prices than other unit types because of their locations mostly being in Bangkok, where land prices are higher than in neighbouring provinces," he said.
The REIC also reported the current situation index for housing developer sentiment in Greater Bangkok in the fourth quarter was 47.6, down from 49.7 in the third quarter and 51.5 in the fourth quarter of 2022.
"The index dropped and was lower than the median of 50, indicating developers had lower confidence and were worried about the outlook for the year," said Mr Vichai.
The lowest confidence was for development cost and performance, with readings of 41.5 and 41.8, respectively.
The confidence index for sales was 45.1, while for investment, employment and new launches the readings were 50.7, 50.7 and 55.5, respectively.
He said listed developers were most concerned about performance as the index for this issue was the lowest at 36.4, a significant dip from 56.8 in the third quarter and 52.3 in the fourth quarter of 2022.
Conversely, non-listed developers had higher confidence in performance, with an index of 50.0, up from 33.8 in the third quarter and 42.0 in the fourth quarter of 2022.