Sales of townhouses in the lower price segment in Greater Bangkok continue to show negative dynamics in 2024, despite a decrease in new supply. The main reason for this decline is the general deterioration of the economic situation in the country, which has a negative impact on demand. Sumitra Wongpakdee, managing director of research company Terra Media and Consulting Co, noted that townhouses priced at 3 million baht and below, which make up a significant share of the market, are experiencing the greatest difficulties.
In recent months, both new supply and absorption of properties in this price segment have slowed down. High levels of mortgage rejections by banks have hindered the availability of financing for potential buyers, which in turn has reduced interest in purchasing townhouses. According to the data, only about 9,000 new townhouses in the price range of 3 million baht and below were launched in the first nine months of 2024. This is significantly lower than the same period in previous years, when 15,000 units were offered in 2023 and 14,100 units in 2022. This makes the current figures the lowest both before and after the pandemic, highlighting the increasing difficulties in this real estate segment.
The real estate segment continues to experience significant market fluctuations, especially when it comes to affordable townhouses. In 2017, this segment reached its peak with 32,200 units, but the following years have shown a steady downward trend. By 2022, sales volume has declined to 14,100 units, indicating an average annual decline of 12% from 2021 to the first nine months of 2024. In parallel, there has been a slowdown in the absorption rate, which has decreased from 5.2 units per project per month in 2018-2019 to 5.1 units per project in 2023, highlighting the overall deterioration trend in this segment.
Experts expect the situation with affordable townhouses to continue to deteriorate rapidly in the near future. High levels of household debt, stricter mortgage lending rules and higher interest rates create a negative backdrop, which in turn restrains demand. In contrast, the mid- to upper-end price segments are showing signs of recovery, as evidenced by the pick-up in absorption rates. Properties priced between 3 million and 7 million baht are showing an average annual growth of 11%, while higher-end categories such as townhouses priced between 7 million and 15 million baht are even reaching 26%.
Among all segments, townhouses priced between 7 million and 15 million baht have performed the best. Their demand has recovered as buyers have started to return to central areas of the city after spending time on the outskirts amid the pandemic and the transition to remote working. However, the situation in the luxury class priced from 15 million baht and above remains mixed, with the absorption rate in this segment standing at just 0.2 units per project per month, the lowest in the market. However, the lack of significant new supply in this segment is not a big concern, as the annual number of new units remains limited, below 200 per year, with some cases of no new supply at all.
