Thai condo launches set for 20-year low as costs, demand and credit bite

Thailand’s real estate sector is facing pressure on several fronts, including rising construction costs, fragile domestic purchasing power and strict lending criteria.

As a result, new project launches in 2026 are expected to fall to around 17,000 units, the lowest level in 20 years, while the private sector is trying to push for state measures to support the market.

Pitipat Preedanont, president of the Thai Condominium Association, said work over the next two years would focus on building on existing missions, particularly working with government agencies to push for support measures for the real estate sector.

Key measures under discussion include easing loan-to-value (LTV) rules for housing loans, reducing transfer and mortgage registration fees, and a proposal to extend leasehold rights from 30 years to 60 years to increase incentives for foreign investors.

There is also a proposal to improve the review process for environmental impact assessment (EIA) reports by shortening the period from the current 1-2 years to about 3-5 months, in order to reduce developers’ financial costs.

Land tax adds cost pressure as stock sells slowly

Another issue that the private sector is prioritising is an amendment to the Land and Building Tax Act, which has been in force for more than five years.

At present, developers’ unsold inventory is taxed at the “other” rate, significantly increasing their tax burden.

At the same time, the absorption rate has slowed, with the average sales period lengthening from 2-3 years to 5-6 years.

This means developers must shoulder tax and interest costs for longer.

Such burdens are likely to be reflected in selling prices, which could affect consumers in the next phase.

Tight credit pushes rejection rate to 40-50%

The housing loan situation remains a major market constraint, with the rejection rate at 40-50%.

Although some consumers still want to buy homes, they cannot access credit, meaning real demand cannot be converted into sales.

Developers are therefore beginning to adjust sales models, such as “Rent to Own” projects, to give consumers who are not yet ready in terms of credit more access to housing.

At the same time, the private sector is proposing that the government consider soft loan measures and debt consolidation approaches to help improve consumers’ borrowing capacity.

Construction costs rise, pushing selling prices up 3-8%

Project development costs have continued to rise, especially recently, with construction costs increasing by around 10-20%, particularly for small projects.

The main factors are energy prices, transport costs and increases in construction material prices, including steel, concrete and aluminium.

This trend means future housing prices may rise by about 3-8%.

However, any price increase will still have to take consumers’ purchasing power as the main consideration.

New launches fall to 17,000 units, lowest in 20 years

The negative factors emerging at the same time have prompted developers to slow new project launches.

In 2026, launches are expected to total only around 17,000 units, the lowest level in 20 years and lower than in 2025, as war has affected costs and consumers’ purchasing power.

As a result, most developers are choosing to manage existing stock, which is based on older costs and whose prices can be controlled more effectively, rather than making new investments that carry risks in terms of costs and purchasing power.

Foreign buyers still provide support at 18-20%

With domestic purchasing power not yet fully recovered, foreign buyers continue to play a role in the market, accounting for about 18-20%.

Groups likely to buy property in Thailand include those relocating from countries facing political and economic uncertainty, such as Myanmar, Taiwan and Russia.

However, foreign purchasing power is still not enough to offset the slowing domestic market.

State policy seen as key variable in market recovery

Nevertheless, the overall outlook for Thailand’s real estate market in the period ahead will continue to depend on several factors, including the direction of the economy, consumers’ purchasing power and government support measures.

“The private sector believes that if various measures can be pushed through in concrete form, they will help restore confidence and stimulate purchasing decisions to some extent.”

Amid the challenges that remain, a recovery in the real estate sector will therefore take time and require support from several sectors in parallel.