Despite the economic recovery, the property market this year may depend heavily on foreign demand as negative factors still affect domestic buyers, according to economists and property analysts.
Piyasak Manason, senior vice-president of the wealth research department of InnovestX Securities, said property market growth this year would likely slow because of various financial policies.
"When inflation is high, the Bank of Thailand will raise interest rates to cope with it," he said. "With the termination of the lending-curb easing which affects lower-end home demand, we do not expect to see a strong real estate market in the near future."
Mr Piyasak said the economy is expected to experience a gradual recovery in the first half of 2023, with the tourism sector playing a crucial role as a driver of growth. The economy is forecast to grow by 3% this year.
However, the recovery is anticipated to follow a K-shaped pattern with the declining curve seen in lower-income earners.
As a result, there has been an increase in non-performing loans and special mention loans for car, hire purchase and credit cards.
"According to the central bank's senior loan officer survey, home loans this year will decline. This suggests that future demand has risks," said Mr Piyasak.
Other unfavourable factors include higher development costs, comprising construction costs, material costs, land costs and wages.
However, the housing prices cannot be raised significantly.
"The factor that will drive the future growth of the property sector is foreign investment, called 'Altasia' or alternative Asia," he said. "Thailand will be a manufacturing base of Altasia after the US-China conflicts."
Last year China was the largest foreign direct investor in terms of value at 77.4 billion baht from 158 projects.
Japan followed with an investment of 50.8 billion baht from 293 projects, and the US invested 50.3 billion baht from 33 projects.
Together with Chinese demand for Thai property, the proportion of Chinese getting unit transfers this year among all foreigners will continue to rise from 57% worth 24 billion baht last year.
"With growing demand from the Chinese, we expect the property market will grow by 5% and it will be an organic growth," said Mr Piyasak.
Simon Lee, chief executive of property brokerage firm Angel Real Estate Consultancy, said the windfall from Chinese buyers, driven by reopened borders early this year, might be felt in the second half.
"The market in the first half will remain sluggish as the number of flights remains low," he said. "The number of flights should increase to 2,000 from the current 1,000 per month compared with 4,000-5,000 in the pre-pandemic period."
He said the behaviour of Chinese buyers in the condo market in Bangkok has changed in the post-pandemic era.
Before 2020, they purchased condo units in bulk with 10-30 units per person.
"Today they are more selective and take longer to make a decision, buying only one unit per person," he said. "Making a decision is more difficult. Despite that we take them to visit more than 10 projects, they didn't even buy."
Another reason is that they're disappointed with the capital gain and rental yield which is not as advertised, Mr Lee said on Tuesday at a seminar held by property research and consulting firm Terra Media and Consulting.
Currently, the rental yield resumed to 3-4% per year from 2% during the pandemic while the capital gain remained unattractive and remained negative in some locations.
