As we reach 12 million administered vaccinations of Thai citizens and expats, and we arrive at a new peak in both infections and deaths here in Thailand due to Covid-19, it’s evident that the global pandemic will have significant economic and social impacts on our nation for the next several years.
Yet, one industry that has been particularly hard hit, the property market, faces a unique set of challenges that are likely to continue until the nation has the pandemic under control.
The real estate industry was already going through hardships due to economic conditions before the emergence of Covid-19, and lockdown measures only made it more difficult for locals and foreigners to buy property in Thailand.
At the end of 2019, an economic slowdown combined with record levels of household debt, and changes to lending practices resulted in decreasing house prices. New loan-to-value mortgage requirements made it more expensive for Thai borrowers to mortgage third and subsequent mortgages, requiring more money down to purchase condos, townhomes, and houses, especially if they’re valued above ten million baht.
By 2020, Thai housing preferences were changing due to Covid-19, where social distancing is nearly impossible in one of Bangkok’s many condo buildings, but easier on the outskirts of the city where you’ll find more spacious detached homes and townhouses. This fact led to an imbalance of supply, with more mid-range properties available to purchase than high-end or starter homes.
Likewise, changes in consumer behavior also made the real estate industry more difficult to navigate for your average person, as individuals decided to delay purchases of new properties until home prices stabilized, and the government and banks introduced new ways to secure home loans, which have been complicating the home buying process for those looking to buy during the pandemic.
At the same time, there were strict travel restrictions in place on foreigners from China, Singapore, and other East Asia countries who often purchase high-end and mid-range properties, leaving a gap in demand and an oversupply of properties in Bangkok.
As a result of Covid-19’s impact on an already struggling real estate market, property developers are looking to build smaller units at affordable prices for Thai citizens, stopping production of mid-range condo units, and also offering deep discounts as high as 50 per cent for local families looking to buy existing inventory.
Despite hardships that Covid-19 is presenting the nation, off into the distance, there are signs of hope for recovery within Thailand’s property markets. Chances are high that those who take advantage of these initiatives might be doing well in a couple years’ time, as more people receive vaccinations and international travel resumes, assuming we’re able to control the pandemic.
If everything goes well economically and politically for the Thai real estate market, and we’re able to return to pre-pandemic GDP levels by 2023 as economists expect, then we might see lots of activity in a few years’ time from both Thai nationals and international buyers looking to finally get into the market and purchase a new home while inventory is high and prices are depressed.
Although it has been a challenge to buy and sell property during the pandemic, those who are restless in their current homes will have a great reason to transition to their next condo, townhome, or single-family property, and can take advantage of a positive outlook for Thailand’s real estate market in the coming years.
After Covid-19 passes, we’ll look back and consider the incredible opportunities the pandemic presented, even in the face of hardships and challenges that we’re currently overcoming as a nation.