Why the Price of Houses in Thailand are Rising Fast

When it comes to opportunities, Thailand’s real estate market is becoming one of those that are discerning.

In residential types, it is in the high-end kinds where international investors choose to engage in, while there is only a normal acceptance in the mid-range kinds. Despite of this, affordable housing projects is suffering because native buyers are sinking down due to debts. Meanwhile, the rates of occupancy in the commercial types in the present properties are getting higher due to the demands plus the possible capacities of the incoming properties in the future. On the retail’s side, it also has its own adjustments especially for the fact that the space for lease is smaller. With these, other assets connected to housing are also been stretching their limits like transportation and other amenities.

According to sources, with the vastness and tremendous economic growth of Thailand, one of the aspects that greatly affected by this scenario is the housing rates, which also comes in a faster pace as well. For instance, single detached houses have an intensified 4.63% price index on 2013. And according to the Bank of Thailand, this increased price index was the highest in record since 2009. Moreover, at the same year, the condominium’s price index jumped by 9.39%. This is a more pertinent index especially for the fact that the people in some places like Bangkok, foreign emigrants and investors of property choose to purchase condominiums to live there either permanently or temporarily. Aside from single houses and condominiums, other various types of property and land experienced an increment on 2013- town houses rose to 6.86%, and even residential land property with 4.85%.

WHAT ARE THE REASONS FOR THIS SUDDEN HOUSING INCREASE?

There are various reasons why the houses in Thailand has a sudden incremental issue. Some of the factors that contribute to this are the following:

1. New condominium projects are located near mass-transit routes. Properties on these sites are infrequent, which makes prices of land on these positions are tremendously high for condominium project developments.
2. Land prices plus the costs in constructions gets higher as well.
3. Condominium units with floor area between 45 and 80 square meters have higher profits.
4. Rates in interests are also increasing.
5. The Bank of Thailand sets complex risk weightings. When the risk is higher, banks will be needing greater capital which will affect the overall cost increase through higher rates on interests.

OTHER FACTORS

Aside from the above mentioned contributors, other significant factors to rising housing rates in Thailand are the following:

1. Buying Condo Units has a Lesser Hassled Process

Because local government permitted condominium units to be acquired using the buyer’s name, international property buyers choose to purchase condo units instead.

2. The Economic Growth and Potential Expansion is Remarkable

The economic status of Thailand is very impressive because for years, it has no indication of getting down. Instead, it continues to expand and grow, and this is a good thing for property investors. This means that Thailand’s real estate industry will continue to increase especially if local workers boost their purchasing capacities. With this, foreign property investors continue to be enticed by the various condominium demand which can also accommodate to Thai workers especially those with capacities to purchase.

3. Probability of Long-Term Growth

Real estate industry will surely continue to grow and thus ensure long-term growth and stability because of Thailand’s diversified society, creating more potential opportunities even on the foreigners.

4. The possible profits and capital gains are strong

Property investors are currently enjoying as much as 6 to 10 percent annual yields in their condominium rentals, creating a well-established impression having a stronger and ever increasing profits. Because of the increase in the prices in property, those who invested in condominiums are enjoying higher increase in their capital annually.  And fortunately for them, this trend is predicted to continue for more years to come.