Thailand real estate danger zones: Under 3 million baht homes struggle to sell

The Real Estate Information Centre (REIC) identified ten dangerous zones for property development in Thailand, where houses and condominiums priced below 3 million baht are not selling. These areas require a selling period of between 30-78 months. The list, released today, includes Pak Kret and Khlong Luang, among others.

Wichai Wiratkaphan, Inspector of the Government Housing Bank and Acting Director of REIC, revealed that the current housing market for properties priced under 3 million baht signals an increase in supply, coupled with a high project reject rate. As a result, developers must exercise more caution while marketing to this group in 2024.

According to a survey of condominiums and housing estates priced under 3 million baht in Bangkok and its vicinity in the third quarter of 2023, the sales volume was lower than in 2022 for every quarter. The third quarter saw a decrease of 7.4%, with condominium sales dropping by 4.5%. The number of unsold units increased every quarter, ending the third quarter at 49,433 units, a 27.5% increase. The value of these properties totalled 110,266 million baht, a rise of 31.5%.

Wichai pointed out the need for caution in areas with a large number of unsold units, such as Nonthaburi City and Pak Kret, where 6,220 units remain unsold, estimated to take about 30 months to sell.

Other areas include Phra Khanong, Bang Na, Suan Luang, and Prawet with 5,929 unsold units, expected to take about 32 months to sell. Thonburi, Khlong San, Bangkok Noi, Bangkok Yai, and Bang Phlat with 5,044 unsold units, are expected to take about 48 months to sell. Samut Prakan City, Phra Pradaeng, and Phra Samut Chedi with 4,175 unsold units, are expected to take about 31 months to sell, and Lam Luk Ka and Thanyaburi with 3,653 unsold units, expected to take about 44 months to sell.

On average, 3,000 housing estate units were launched per quarter in the third quarter of 2023, a decrease of 11.4% in new unit sales. This was the first quarter to witness this trend. The remaining unsold units totalled 44,174, valued at 113,180 million baht. Out of these, 95% are townhouses.

There are no townhouses priced below 1 million baht in the market anymore, with most priced between 2-3 million baht. Detached houses are not common in the inexpensive range due to land price limitations and increasing construction costs.

Wichai also mentioned areas to be cautious of for housing estate development, such as Khlong Luang and Nong Suea with 7,739 unsold units, which are expected to take about 78 months to sell. Lam Luk Ka and Thanyaburi with 6,493 unsold units, are expected to take about 61 months to sell. Bang Yai, Bang Bua Thong, Bang Kruai, and Sai Noi with 5,459 unsold units, are expected to take about 50 months to sell. Bang Phli, Bang Bo, and Bang Sao Thong with 5,455 unsold units, are expected to take about 25 months to sell, and Pathum Thani City, Lat Lum Kaeo, and Sam Khok with 5,929 unsold units are expected to take about 45 months to sell.

Project Reject Rate

Kessara Thanyalakphak, Managing Director of Sena Development Public Company Limited, stated that Sena has a project reject rate of about 50% in the price group below 3 million baht, which is likely the case for the entire market.

Naporn Sunthornjitcharoen, the Chairman of Land and Houses Public Company Limited, stated that the company does not have many properties priced under 3 million baht due to high loan rejection rates in this segment. However, the company’s loan rejection rate has increased from less than 10% to over 10%, even reaching 20% at certain times.

The company has coordinated with banks to assess the potential of customers. The restrictions of the city plan law in Bangkok and its vicinity have made it difficult to find land for townhouse development, reported KhaoSod.