According to a recent report by the Real Estate Information Center (REIC), housing prices in Thailand are projected to rise by 5-10% in 2023. This prediction is based on the continued upward trend in the standard home construction price index, which saw a year-on-year increase of 5.6% in the fourth quarter of 2022.
Vichai Viratkapan, acting director-general of the REIC, states that “soaring prices of construction materials will be pushed to home prices this year which will increase eventually.”
Viratkapan also notes that the largest increase was in structural engineering jobs, accounting for 28.6% with an increase of 6.1%. This is in line with the construction materials category, where six items saw a rise in prices. The largest increase was seen in sanitaryware, at 13.2%, due to high oil prices impacting manufacturing and transportation costs. A shortage of labor and rising cost of construction materials are named as major causes of the increase.
This prediction is also echoed by Chaiyan Chakarakul, chairman of executive board of SET-listed developer Lalin Property, who stated that “housing prices this year would likely rise by 5-10% driven by increasing construction costs and a labour shortage.” He also notes that “since the pandemic, labour in the construction sector has been in a shortage” and calls for the government to “help increase the amount of foreign labour and be open to more nationalities in the construction sector, not only four countries like today.”
For investors in the Thai real estate market, this prediction is further evidence of a market that’s heating up. The Thai property market has been competitive in recent years and is expected to see a major post-pandemic rebound in 2023. The predicted increase in prices is likely to attract even more investors looking to capitalize on the opportunities presented by the Thai market. The market is already seeing increased interest from cryptocurrency investors and Chinese buyers while well-heeled buyers from across the globe increasingly rate Bangkok as an option.
It is important to note that while the predicted increase in housing prices may present opportunities for investors, it also presents challenges. The rising costs of construction materials and labor can make it more difficult for developers to keep prices competitive for buyers of new property.
It is also worth noting that the REIC’s prediction is based on the standard home construction price index, which may not necessarily reflect the entire market. It is important for investors to conduct their own research and due diligence to get a better understanding of the specific opportunities and challenges present in their desired area of investment.
Summary
The recent prediction by the Real Estate Information Center that housing prices in Thailand are expected to rise by 5-10% in 2023 presents both opportunities and challenges for investors in the Thai real estate market. While rising prices can be a sign of a healthy market, the predicted increase is due to a shortage of labor and rising prices of construction materials which can make it more difficult for developers to keep prices competitive, and can impact the overall market.
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