Getting a handle on the condominium market in Bangkok can be very difficult as you cannot properly see if there is an oversupply or not in the market. Each person has a different view on the situation and with the tightening of house mortgages this year being 2019 in Thailand many developers have lowered their prices to sell their inventory to local property buyers before loans become more difficult to obtain for a second or third home.
The government has been trying to push development further out of central Bangkok as the land has become very expensive and this cost has been pushing the prices of the condominium units sky-high. If we look at the price of land, we saw the most expensive sale in 2017 with the payment of 3.1 million baht per sq w on Lang Suan Road. Better put that was USD 25,000 per square meter. Land prices tend to increase by about 7% per year however it has spiked at 12% and this additional cost gets added to the cost of the units in the end. Buying overpriced land in certain areas in Bangkok had a knock-on effect that you tended to have many units going unsold because of the higher prices. Since developers are trying to recoup the costs the next projects are slowed down.
How this affects the market tends to be that if you have the same type of graded development and the one is 14% higher than the other it tends to created stagnant sale where at times half the units would still be standing empty. People are looking for value for their money and the overpriced land creates this new problem for sales stagnation later. At the end of 2018 there was a total of just over 9,000 unsold units in Bangkok out of 34,000 units sold.
With loads of new launches, the unsold units had been concentrated in certain areas in Bangkok. This had been Sukhumvit as well as Pathumwan. Looking at the property grading in Bangkok, the sales rates for super luxury units was 81% sold while the luxury units was 79% sold. This was only because of a short supply on luxury condominium units. The standard condo units had just over 50% sales rates which shows that the wrong type of property was being built as the market for the standard condo units have extremely high competition.
There would appear to be an oversupply in the lower end of the market but with developers shift all their property at lower rates one wonders if this will be enough to clear the market when the new mortgage rules kick in. There is clearly no oversupply in the mid and top end of the market in this point in time. We will have to see at year end of 2019 the property market really is when second and third mortgage buyers find it harder to finance their purchases.
Always take proper financial advice before buying property in Thailand. The market is extremely fluid as new rules and developments enter the market. This website offers neither financial advice or legal advice but guidance in the Thai property market.