According to Wichei, the acting director of the Real Estate Information Center at the Government Housing Bank in Thailand, the price index for newly constructed homes for sale in Bangkok and its surrounding areas stood at 129.8 in the third quarter of this year, representing a 2.1% increase compared to the same period last year. Moreover, the index has shown a slight rise compared to the second quarter of this year.
The factors contributing to this surge in property prices can be interpreted from various perspectives. Firstly, the increase in land prices stands out as a significant factor driving the rise in property prices. According to the Thai Ministry of Finance's 2023-2026 Thai land price assessment report, the estimated new land assessment prices are expected to increase by an average of approximately 8.93%. Particularly in Bangkok, land prices have increased by 6.2% year-on-year, maintaining an overall upward trend, inevitably driving the escalation in property prices.
Rising construction material costs have also impacted property prices to a certain extent. Global inflation and the surge in oil prices have directly led to increased transportation and construction material costs. The prices of construction materials such as steel, cement, tiles, and paint have skyrocketed, resulting in increased costs for real estate development. These cost escalations have translated into higher property sale prices, thereby contributing to the overall rise in property prices.
The escalation of labor costs has also exerted pressure on property prices. With the new government in Thailand planning to gradually raise the minimum wage standard, it is projected that the minimum wage will increase from the previous average of 353 Thai baht per day to 600 Thai baht within 2027, representing a growth of approximately 70%. Labor costs constitute a significant component of real estate construction costs, particularly for labor-intensive real estate industries. The increase in labor costs is expected to significantly raise construction expenses, consequently influencing property prices.
