Bangkok housing market set to decline amid poor economy

SCB EIC, the research centre of Siam Commercial Bank, predicts that the transfer of new residential units in Greater Bangkok will decline by 10% this year, with a further contraction of 1-3% projected for 2025, mainly due to the country’s sluggish economy.
In terms of value, the decrease is estimated at 9% for 2024, but it may stabilise to between 0-2% next year, according to the research house.
The downturn in the residential market is attributed to economic challenges, including rising living costs, weakened purchasing power, a high level of household debt, increasing interest rates, and stricter mortgage approval criteria.
These factors are causing prospective homebuyers, particularly in the lower- to middle-income segments, to postpone purchasing decisions.
Additionally, SCB EIC forecasts that the number of newly launched residential units in 2024 will decrease by 28% year-on-year, with the figure expected to recover in 2025 with a projected contraction of 2-4%.
In response to these conditions, property developers are focusing more on middle- to upper-market projects, where purchasing power remains stronger.
Amid tighter mortgage approval processes, major local banks reported a contraction in mortgage loans during the first nine months of this year.
SCB, the fourth-largest bank by total assets and the industry leader in housing loans, reported a mortgage loan portfolio of 779 billion baht as of September 2024, down 15.5% quarter-on-quarter, 39% year-to-date, and 38.5% year-on-year.
As of September, Bangkok Bank (BBL), Thailand’s largest bank, had a mortgage loan portfolio of 332 billion baht, a slight decrease of 0.6% quarter-on-quarter and 1.7% year-to-date. Meanwhile, Bank of Ayudhya (Krungsri) saw the value of its housing loan portfolio drop to 248 billion baht, down 3% quarter-on-quarter and 7.6% year-to-date.
TMBThanachart Bank (ttb) also reported a decline in overall mortgage lending, with a drop of 0.8% quarter-on-quarter and 2.2% year-to-date as of September, according to a statement it released to the Stock Exchange of Thailand (SET).
Krungthai Bank (KTB), the second- largest lender in Thailand, was the only major bank to report growth in home loans. As of September, its mortgage loan portfolio stood at 498 billion baht, up 1.5% quarter-on-quarter and 2.9% year-to-date.
Kasikornbank (KBank) did not disclose housing loan data in its financial statement to the SET.
In response to market conditions, large local banks announced across-the-board cuts to their lending interest rates, including the minimum retail rate (MRR) used for housing loans. BBL currently offers the lowest MRR among major banks, at 7% per year.
Other banks’ loan rate reductions will take effect on Nov 1. The new MRRs will be: KTB at 7.445%, KBank at 7.180%, SCB at 7.175%, Krungsri at 7.275%, and ttb at 7.705%.