Rising house prices, driven by increasing construction costs, are having a lesser impact on potential homebuyers than the growing challenges in obtaining mortgage loans, according to property associations.

 

Pornarit Chounchaisit, President of the Thai Real Estate Association, noted that the surge in costs reflects a global trend, with property prices climbing in major cities worldwide.

 

“The war and its influence on oil prices are escalating construction costs for new housing projects,” he said. “Moreover, rising labor costs will further drive up housing prices.”

 

Although selling homes remains difficult, housing prices are expected to increase next year due to the government’s planned wage hikes. However, this policy is likely to benefit foreign workers, who constitute 50-60% of the labor force, more than local labor.

 

Soonthorn Sathaporn, President of the Housing Business Association, emphasized that the increase in housing prices has not outstripped inflation.

 

“The real challenge lies in stricter lending criteria, which are preventing many potential buyers from securing mortgages,” he said.

 

He also pointed out that mortgage rejection rates have surged to 35%, up from the usual 15-20%, with rejection rates reaching 50-60% for homes priced between 2-3 million baht.

 

Some developers have had to reduce their profit margins to make homes more affordable and are expediting construction to control costs.

 

To boost demand, Soonthorn urged the government to extend the expiring property measures and introduce income tax deductions for first-time homebuyers. He also suggested that relaxing loan-to-value (LTV) regulations could stimulate second-home purchases, particularly for properties near schools and workplaces.

 

Prasert Taedullayasatit, President of the Thai Condominium Association, supported the call for temporary relaxation of LTV rules to encourage market growth, proposing that the government withdraw these measures if speculative behavior is observed.

 

“A reduction in interest rates would also enhance purchasing power, especially for lower-income buyers, while a weaker baht could boost tourism and attract foreign property buyers,” he added.

 

To further stimulate demand in Q4, the three associations are organizing the House & Condo Expo from October 31 to November 3 at the Queen Sirikit National Convention Center. Their goal is to sell at least 1,000 units, totaling over 4.5 billion baht in value, and they expect an additional 10 billion baht in sales in the months following the event.

 

Source: Bangkok Post

 

Yours sincerely,

The editorial team at Invest Bangkok Property