Thailand's Real Estate Crisis Deepens

In 2025, Thailand's property market is experiencing a severe crisis, with home loan growth projected to turn negative for the first time in the country's history. This downturn is fueled by sluggish purchasing power, a massive housing oversupply, and structural issues more challenging than the COVID-19 pandemic's impact.

Consumer Caution and Bank Stricter Policies

Consumer behavior shifts, with people increasingly worried about future income, leading to cautious spending and investment in high-value assets like property. Banks have become stricter with loan approvals, extending caution beyond low and middle-income earners to higher-income brackets, as part of a more cautious approach to risk assessment.

Historic Negative Growth Predicted

Yuttachai Teyarachakul of UOB Thailand describes the situation as the worst in a century, predicting negative new loan volumes this year. Banks are shifting focus to the second-hand property market, where homes are about 30% cheaper than new builds.

Structural Issues and Potential Price War

The crisis, considered more difficult than the COVID-19 downturn, involves structural issues like housing oversupply and lack of purchasing power. A potential price war could have devastating consequences, eroding the wealth effect and disrupting the lending and liquidity systems.

Financial strain on households is evident, with more homeowners converting property into cash and a continuous rise in non-performing loans. Recovery could take one to two years, dependent on broader economic improvement.