The price index of new condos in Nonthaburi and Samut Prakan declined for four consecutive quarters because of an oversupply of unsold units in older projects, primarily within price segments affected by negative factors.
Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC), said the ongoing decline in the price index for the two provinces can be partly attributed to older projects that have been on the market since before 2021.
“There was a substantial inventory of unsold condo units in projects launched more than three years ago in these provinces. These projects had lower development costs than the newer ones,” he said.
REIC reported the total number of unsold condo units in Nonthaburi amounted to 6,705 worth 14.8 billion baht as of the end of the second quarter of 2023. Of this number, construction of more than half (3,485 units) had been completed and 87% were priced at 3 million baht or less per unit.
In Samut Prakan, the number of unsold condo units totalled 5,991 worth 23.2 billion baht. Of this amount, construction of 825 units had been completed and 86% were priced at 3 million baht or less per unit.
Though condo units in these projects were priced lower than newer developments, the purchasing power of the target buyers for these projects has been affected by the considerable rise in interest rates.
The high level of household debt, which exceeded 90% of GDP, also made it harder for buyers in the lower-end segment to obtain home loans.
Therefore, developers of condos in the lower-end segment offered attractive campaigns and promotions to boost sales in the third quarter of 2023. The most popular form was cash discounts.
“Discount campaigns were used in projects that were launched before 2021 as development costs remained at their previous levels, while the prices of construction materials and labour costs increased in the past few years,” said Mr Vichai.
According to REIC, the overall price index of new condos available for sale in Bangkok and the two neighbouring provinces was 155.0 in the third quarter of 2023, up 1.2% from 153.2 in the same period last year.
This marked the third consecutive year-on-year increase, starting from the first quarter of 2023.
When separated by areas, condos in Bangkok had risen in the price index for three consecutive quarters while those in Nonthaburi and Samut Prakan had a year-on-year drop of 2.1%, marking consecutive declines for four quarters since the fourth quarter of 2022.