Thailand real estate prices expected to rise in 2022
Since the first quarter of 2020, the home price index has been declining while new home prices have increased. Several pandemic-related factors are to blame, including an increase in the costs of fuel and construction materials, along with higher inflation and a labour shortage. The compounding of these pressures mean real estate prices in Thailand are ready to rise in 2022.
Following the resumption of global economic activity, the prices of several key construction materials like steel and cement increased, while fuel prices increased by 50%, the Bangkok Post reported. In 2021, the price index for construction materials increased by 8% from 2020 – the highest jump since 2008.
Due to the significant price increases, developers will find it difficult to finish their projects and deliver pre-bought units to their customer at the contractual prices, Landy Home’s Director of Construction Phanid Maneerattanaporn told the Bangkok Post.
“It will be a challenging year for homebuilders as the demand side is strong but the supply side or construction costs is worrying. We need to manage costs the best to finish the units at the price we agreed with customers earlier.”
But the cost of construction materials aren’t the only part of the supply chain that have taken a hit during the prolonged pandemic.
“Many exported materials are obstructed by shipping delays or supply shortages, resulting in a domino effect.”
The chairman of the property development company Supalai has echoed similar concerns.
“The costs of housing development, excluding land costs, will likely increase by 3-4% this year. … When combined with higher labour wages and fuel prices, housing prices will be 2% higher.”
In December last year the Bureau of Trade and Economic Indices reported that the costs of iron and steel products had increased by 28.7%, followed by concrete (5.6%), aluminium, asphalt, and sand (4.2%), electricity and water supply equipment (3.8%), and cement (3%).
Source: Bangkok Post
