The Bangkok housing market is projected to decline amid economic challenges, according to SCB EIC, the research arm of Siam Commercial Bank. They anticipate a 10% drop in the transfer of new residential units in Greater Bangkok this year, with an additional contraction of 1-3% likely in 2025, largely due to Thailand’s stagnant economic conditions.

 

In terms of market value, a 9% decrease is forecast for 2024, with potential stabilization between 0-2% expected next year.

 

The slowdown in the housing sector stems from rising living costs, reduced purchasing power, high household debt, increased interest rates, and more stringent mortgage approval processes. These pressures are prompting prospective homebuyers, especially within lower- and middle-income brackets, to delay their purchasing plans.

 

SCB EIC also forecasts a 28% year-on-year reduction in newly launched residential units for 2024, with moderate recovery expected in 2025 as the contraction may ease to 2-4%.

 

To address these conditions, developers are concentrating on middle- to high-end projects where buying capacity is less affected. Major local banks reported a decline in mortgage lending in the first nine months of this year due to tighter mortgage criteria.

 

SCB, the fourth-largest bank in Thailand and a leader in housing loans, reported a mortgage loan portfolio of 779 billion baht as of September 2024, reflecting a quarter-on-quarter decrease of 15.5%, a year-to-date decline of 39%, and a year-on-year drop of 38.5%.

 

Bangkok Bank (BBL), the country’s largest lender, recorded a mortgage portfolio of 332 billion baht, slightly down by 0.6% quarter-on-quarter and 1.7% year-to-date. Bank of Ayudhya (Krungsri) saw its housing loan portfolio decrease to 248 billion baht, down by 3% quarter-on-quarter and 7.6% year-to-date.

 

TMBThanachart Bank (ttb) reported an overall mortgage lending decrease of 0.8% quarter-on-quarter and 2.2% year-to-date as of September, according to a filing with the Stock Exchange of Thailand (SET).

 

In contrast, Krungthai Bank (KTB), Thailand’s second-largest lender, reported growth in its mortgage loan portfolio, reaching 498 billion baht by September, a 1.5% increase quarter-on-quarter and a 2.9% rise year-to-date.

 

Kasikornbank (KBank) did not release mortgage loan data in its SET report.

 

In response to current market trends, major banks announced widespread cuts to their lending rates, including adjustments to the minimum retail rate (MRR) for housing loans. BBL now offers the lowest MRR at 7% per year. Other banks’ rate reductions will be effective from Nov 1, with the revised MRRs as follows: KTB at 7.445%, KBank at 7.180%, SCB at 7.175%, Krungsri at 7.275%, and ttb at 7.705%.

 

Source: Bangkok Post

 

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The editorial team at Invest Bangkok Property