Thailand house prices seen rising as oil-linked costs climb

Prateep Tangmatitham, executive chairman of Supalai Public Company Limited, acknowledged that house prices are likely to rise in line with accelerating construction costs, driven by both transport expenses and material prices linked to global oil.

Although the impact may be only temporary if the war eases quickly, contractors and project developers still have to shoulder the higher costs immediately during the transition period.

“This situation means operators have to keep the business steady through cash management, paying on time and helping to secure material supplies, so that the construction chain does not stall.”

Looking back to the start of the year, the property market was still showing signs of recovery, particularly in the first two months, supported by lower interest rates.

But the war, which erupted rapidly within just one month, immediately changed the market direction.

“The key variable is duration.”

If the conflict drags on, costs will continue to rise, and operators will have no choice but to pass those costs on to selling prices, with Supalai estimating that house prices could rise by an average of 4-5%.

Suthep Panyasakorn, managing director of D-Land Group Co., Ltd., acknowledged that construction costs have risen sharply and estimated the increase at no less than 12%, affecting selling prices that may need to be raised by about 5%.

However, projects currently under construction, especially townhouses, are facing limited impact because 30-40% of the work has already been completed, while the remainder consists of architectural and interior work for which materials were procured in advance.

Custom-home market stays flat, but costs jump

The housebuilding market is reflecting the same picture.

Anantakorn Amornvatee, president of the Home Builder Association, said the association estimates the market remained flat in the first quarter, with a value of about 47 billion baht.

But beneath that stability lies significant pressure from rising costs.

Key materials such as steel and petrochemicals have risen in line with energy prices, pushing construction costs steadily higher and beginning to affect house pricing structures.

The market’s key signal is expected to emerge after April.

Custom-built house prices are projected to rise by 3-5%, while prices for new housing projects are expected to increase by 5-10%.

While those figures may not look high, in reality, they could mean additional costs of hundreds of thousands to millions of baht per unit.

This is a structural turning point as the market enters a new cycle of higher prices.

New Cost Base: an unavoidable new cost structure

The lending division of Kiatnakin Phatra Bank believes the market is moving into a “New Cost Base” phase.

Oil prices above US$110-US$120 per barrel are expected to drive up the cost of core materials such as steel, cement and concrete immediately.

That is because the cost structure of a house is divided into 60% materials and 40% labour.

Steel alone accounts for 18% of a home’s price, while systems work makes up another 12%, all of which are tied to energy.

When energy becomes more expensive, the whole system’s costs rise together.

On another front, purchasing power has begun to weaken.

Higher oil prices are pushing up living costs, forcing consumers to redirect spending towards essentials.

At the same time, inflation is likely to rise, which could in turn push interest rates higher.

The result is monthly instalments rising by several thousand baht, reduced borrowing capacity and lower affordability.

Kiatnakin Phatra Bank expects property transfers in 2026 to fall to 290,000 units, the lowest level in eight years.

The mid-to lower-end market faces the biggest risk amid swelling stock

The clearest impact is appearing in the 2-5 million baht housing segment, the market’s largest, accounting for 54% of sales worth 76.2 billion baht.

Several areas are already facing high unsold inventory, including Rangsit-Pathum Thani, Bang Bua Thong-Nonthaburi and Bang Na-Samut Prakan.

Combined with slowing purchasing power, this segment is becoming the market’s most vulnerable point.

In this situation, consumers are in the middle of an important decision-making game.

Option one is to buy now, securing older cost-based prices, promotional offers from developers and fixed-rate interest.

Option two is to wait and watch, but that may mean facing higher house prices, rising interest rates and tighter lending conditions.

That has created an opportunity for ready buyers.

Meanwhile, developers are shifting the game from competition over design to competition over value and certainty, in response to consumers in an era of highly volatile costs.

Although the overall market may appear weak, opportunities remain in the crisis.

Ready buyers can still purchase homes at the old cost base and receive special offers that help reduce the risk of rising interest rates, while foreign demand remains present in some segments.

The year 2026 marks a turning point for the property market.

What was once a market shaped mainly by buyers delaying decisions is becoming one increasingly pressured by costs.

The prospect of house prices rising by 5-10% is not merely a short-term impact from war, but a reflection that the industry’s new cost base is genuinely moving higher.

The key issue, therefore, is not only how much prices will rise, but who can adapt in time.

In a game where cost is the determining factor, deciding quickly may ultimately prove more worthwhile than waiting in the hope of getting a better price.