If these measures are timely and effectively implemented, they could help improve the atmosphere and activity of residential transactions.

Since the beginning of 2023, the total transaction volume in Thailand's residential real estate market has decreased compared to the previous year. Despite government support measures, such as allowing foreigners to resume buying apartments, reducing transfer and mortgage fees for residences priced below 3 million Thai Baht, and developers aggressively promoting unsold residential properties, overall consumer purchasing power has not fully recovered.

High household debt, coupled with rising loan interest rates, has affected monthly installment burdens and new loan amounts. Therefore, the residential real estate market is currently in a sluggish state. For example, in the first seven months of 2023, the number of residential sales contracts in Bangkok and surrounding areas decreased by approximately 12% year-on-year, and the number of residential transfers in the first half of the year decreased by about 3% year-on-year.

Faced with various challenges, the Kasikorn Research Center expects a 7.8% decrease in the total residential transfers in Bangkok and surrounding areas for the entire year of 2023. However, if various factors remain stable and gradually improve, it is expected that residential transfers in Bangkok and surrounding areas will recover in 2024, with an estimated growth rate between 1.2% and 4.6%.

The specific details, timing, and effectiveness of the government's upcoming measures to support real estate recovery need to be closely monitored in the next stage. The government plans to introduce economic stimulus measures primarily targeting middle and low-income groups and take other actions to support the recovery of the residential real estate market. These measures are expected to support the recovery of the residential real estate market in 2024.

Although the atmosphere and conditions of Thailand's residential real estate market may slightly improve, developers still need to invest cautiously in new projects. The market continues to face three major challenges.

The issue of supply-demand imbalance in residential properties in Bangkok and surrounding areas has not been resolved. The cumulative number of unsold residential properties has remained above 200,000 units for more than six years.

As of the first half of 2023, the accumulated number of unsold residential properties reached 220,000 units, and it would take more than three years to sell them all, even without new project launches.

Currently, the ratio of unsold residential properties in Bangkok and surrounding areas to the number of transfers from legal entities to individuals is approximately 2.4 times, and this ratio continues to rise. This is due to a recent decrease in the number of signed contracts for new projects, leading to a further increase in the accumulated number of unsold residential properties. At the same time, in some areas, multiple developers are launching new projects almost simultaneously.

In addition, there is a significant amount of supply in the secondary housing market, with high transaction activity. In the first half of this year, the proportion of transfers of second-hand residential properties between individuals to the total number of residential transfers (individuals + legal entities) increased from an average of 40% before the COVID-19 pandemic to over 50%.

Operating costs for developers continue to rise, leading to increases in residential prices (or maintaining residential prices while reducing the area) and potentially affecting the liquidity and financing capabilities of some developers. Significant cost increases include land, building materials, labor wages, as well as marketing expenses, land and building taxes, and other fees.

Furthermore, financial costs are also rising with increases in commercial loan interest rates and securities rates, such as bonds. In the remaining time of 2023 alone, residential real estate developers have approximately 59 billion Thai Baht in bonds and promissory notes maturing, and there will be over 116 billion Thai Baht maturing in 2024.

Thailand's total population is decreasing, and it has entered an aging society. The registered population in Bangkok and surrounding areas has decreased for three consecutive years, with an average annual decrease of 0.2% in Bangkok and a mere 0.6% increase in the surrounding areas.

Over the past five years, the annual increase in the new population in Bangkok and surrounding areas has decreased by 7% due to changes in people's perceptions and lifestyles, and this trend is expected to continue. However, there is still a significant number of non-registered residents in Bangkok and surrounding areas, some of whom are temporary residents who may move at any time based on economic factors and employment conditions.

Therefore, from now until next year, real estate developers must pay more attention to the above challenging factors and exercise caution when investing in new projects. This is especially true in areas where many new projects are being launched simultaneously and in residential developments priced below 3 million Thai Baht, which account for 50% of the total unsold residential properties in Bangkok and surrounding areas.

Additionally, close monitoring is still required for residential properties priced at 10 million Thai Baht and above, as the proportion of unsold units is high. Many developers are simultaneously developing such residential properties and planning to launch more new projects, but the customer base for such products is limited, and sales of such residential properties have shown signs of slowing down in the past.