Decline in population poses challenge for Bangkok's housing market
Recent decline in population has raised concerns about the sustainability of Bangkok's housing market. Over the next two decades, statistical trends indicate a decrease in population across all age groups, particularly a significant decline of approximately 6-7% among younger age groups.
Currently, Bangkok's population is around 5.5 million people, showing no clear growth trend but rather occasional fluctuations. Although some communities experience population decline, new community developments help offset the decrease.
In contrast, the provinces surrounding Bangkok have a population of approximately 5.5 million people, with a growth rate of 1.5% per year. Considering the combined population of Bangkok and its surrounding provinces as a whole, the increasing population on the outskirts contributes to the region's overall expansion.
According to a study conducted by the Bangkok Metropolitan Administration (BMA) a decade ago, the informal or undocumented population accounted for roughly 50% of the official population in both Bangkok and its metropolitan region. This suggests that the total population, including undocumented residents, could reach up to 16.5 million people.
These figures shed light on the challenges faced in the surrounding provinces related to housing. Typically, first-time homebuyers opt for detached houses or townhomes. The growing population on the outskirts creates a demand for affordable housing options and residential land suitable for these buyers. However, within the city of Bangkok itself, high land prices make it challenging to create affordable housing within the desired price range.
This situation calls for approximately 40,000 units per year to cater to the demand from first-time homebuyers alone. Another group comprises individuals who prefer condominiums in Bangkok. While condominiums in the outskirts may have lower prices, they may not offer convenient access to the central business districts for work purposes. Consequently, the demand for affordable condominium units in Bangkok could be approximately 30,000 units. Factoring in housing units allocated for mixed-use buildings and land, a total of around 70,000 units would satisfy the needs of first-time homebuyers.
Annually, approximately 100,000 housing units are sold in Bangkok and its metropolitan region. Thus, the remaining 30,000 units, after allocating for first-time homebuyers, represent the demand from second and third-time homebuyers seeking to change their residences.
The growth of the housing market relies on the continuous population growth in both Bangkok and the surrounding provinces. While the figures suggest limited growth within Bangkok alone, there is hope for growth in the surrounding provinces.
Although the declining population trend among different age groups may indicate a decrease in housing demand, it may not significantly impact market participants or developers due to other factors that influence the real estate market. However, the actual decrease in demand could still have some measurable impact, particularly over the next 20 years.
Ultimately, the sustainability of the housing market hinges on Bangkok and its metropolitan area's ability to provide ample economic opportunities to individuals across Thailand. This involves ensuring sufficient economic prospects and incentives for people to relocate to the region. Moreover, continuous population growth of at least 1.5% per year in the surrounding provinces plays a crucial role in maintaining housing market demand.