Consumer confidence, not costs, now poses biggest threat to Thai property market

Weakening consumer confidence, rather than rising costs alone, has become the biggest threat to Thailand’s property market as global uncertainty prompts buyers to delay major purchases, according to Pornnarit Chuanchaisit, president of the Thai Real Estate Association.

Pornnarit said the conflict in the Middle East, although far from Thailand geographically, was having a significant indirect effect on the Thai economy. The first impact has come through higher oil prices, which are pushing up costs across the economy, from transport to construction materials.

For the property sector, which depends heavily on material costs and logistics, such increases directly affect the development of new projects. However, Pornnarit said the bigger concern was weakening confidence among consumers.

Buyer hesitation and tighter lending weigh on property demand

At a time of heightened global uncertainty, consumers are increasingly choosing to postpone big financial decisions, he said. Homes and condominiums, as high-value assets, are therefore often among the first purchases to be delayed.

At the same time, some investors are moving funds into assets viewed as safer, such as cash or gold, even though gold prices themselves remain volatile.

Pornnarit said the credit squeeze in Thailand’s property market, once concentrated mainly in the lower- to middle-income segment, was now spreading more broadly. One of the clearest signs of stress was the mortgage rejection rate, which in some projects has risen as high as 60-70%.

He said many commercial banks had become much more cautious in extending credit, with some no longer considering condominium loans at all and focusing only on low-rise housing projects.

As financing becomes harder to access, demand has weakened while supply remains substantial, increasing pressure on both buyers and developers.

Developers slow new launches as market seeks a new balance

Despite the subdued picture, Pornnarit said the market was adjusting structurally in search of a new equilibrium. With the economy offering limited support, many developers have chosen to delay new project launches.

This has led to fewer construction permit applications and a drop in the number of new housing developments coming onto the market. As a result, new supply is easing, gradually helping restore balance between demand and supply.

The shift is also being reflected in slowing sales of construction materials, which have begun to show a clear loss of momentum.

Another issue being closely watched is the construction labour force, particularly migrant workers. Some Cambodian workers, who form an important part of Thailand’s building sector, have started returning home.

However, Pornnarit said the impact had not yet reached a critical stage because the slowdown in new construction had reduced labour demand at the same time, leaving the remaining workforce broadly sufficient for existing work.

Overall, Thai property developers are now in a defensive mode, he said. Rather than pursuing rapid expansion, this year’s main goal is to keep businesses stable through a period of uncertainty, in the hope that if global conditions begin to ease and confidence returns, the Thai property market may start to recover next year.