Debt Crisis Sparks Second-Hand Housing Boom as Foreclosures Skyrocket 210%
Affordability crisis forces homeowners to default on mortgages, pushing thousands of properties onto the market; investors eye 'golden opportunity' amid national debt strain
- A national debt crisis in Thailand has caused a 210% surge in foreclosed properties as homeowners default on mortgages due to declining income and rising debt.
- This flood of foreclosures is fueling a second-hand housing boom, attracting buyers with properties that are often cheaper, larger, and built with better materials than new constructions.
- The spike is concentrated in assets held by the Legal Execution Department (LED), as commercial banks are increasingly offloading high-risk debt rather than holding it themselves.
- Investors view the situation as a "golden opportunity" to acquire properties at 20-40% below market value, despite the significant risks involved, such as poor condition and legal complexities.
The affordability crisis forces homeowners to default on mortgages, pushing thousands of properties onto the market; investors eye a 'golden opportunity' amid national debt strain.
Thailand’s housing market is experiencing a significant upheaval as soaring household debt drives a massive spike in mortgage defaults, leading to a dramatic expansion of the second-hand property sector.
New data reveals that the portfolio of foreclosed assets held by the Legal Execution Department (LED) has surged by over 210% in a single year, signalling a profound affordability crisis for countless homeowners.
While the crisis reflects the financial hardship of those struggling to meet payments, it has created a "golden opportunity" for both first-time buyers seeking affordable homes and seasoned investors.
Surachet Kongcheep, head of Research and Consulting at Cushman & Wakefield Thailand, noted that the trend is a direct reflection of declining income and rising debt pressure, forcing a transition in the nation’s residential market.
The latest batch of foreclosed assets entering the LED stands at 67,641 units—a staggering increase of 210.1% compared to the second quarter of 2024.
Crucially, this surge is not matched by commercial banks, whose holdings of non-performing assets (NPAs) actually fell by 11.9% to just 6,144 units.
This indicates that financial institutions are increasingly offloading high-risk debt and transferring assets directly to the LED or to Asset Management Companies (AMCs) rather than retaining them.
"Strict loan policies and stagnant household income mean the second-hand market reflects economic problems faster than the new home market," Surachet stated.
Second-Hand Homes Outshine New Builds
The appeal of pre-owned homes is multifaceted. They are often significantly cheaper than new developments but also offer features no longer available in modern construction, such as larger usable floor space and better-quality, older materials.
"Think of a condo from 20 years ago: 90–100 square metres of space, large balconies, and real wood materials, which are almost non-existent in modern condos focused on cost reduction," Surachet explained.
As new homes in prime locations—particularly townhomes and single houses in the Greater Bangkok area—become unaffordable due to rising land and material costs, the second-hand market has emerged as a "true competitor" to new construction.
Investor Opportunity Comes with Risk
For experienced investors, properties sold via the LED and AMCs are highly attractive, often commanding prices 20–40% below market value.
However, purchasing these foreclosed assets carries significant risks, including poor property condition, legal complexities, potential occupation by former owners, and limited opportunity for prior inspection.
Experts caution that success in this segment requires meticulous preparation and detailed knowledge of legal documents and site conditions.
Looking ahead, Surachet predicts that high interest rates, stagnant wages, and persistent high household debt will lead to a continued rise in second-hand properties over the next one to two years.
“If public income does not grow more than this, we will see more foreclosed assets, and second-hand homes will become the product people turn to over new projects in many price segments,” he concluded.
