There are now rumors that a price war will break out in the real estate industry, causing the market to suffer a once-in-a-century slump. Dr.Sopon insists that this is not true, and that it is a rhetoric created to get the government to help real estate businesses.

 

Dr.Sopon Pornchokchai, President, Agency for Real Estate Affairs (www.area.co.th) will clarify the misunderstandings surrounding the news: "Real estate risks a price war, repeating the pattern with automobiles . The Bank of Thailand points out that people are concerned about their incomes - banks are strict about lending." Details are as follows :

 

1. Ms. Chayawadee Chaianan, Assistant Governor, Corporate Relations Department and spokesperson for the Bank of Thailand (BOT), revealed that the overall real estate market currently "looks worse than before." Dr.Sopon said that in one respect, this may not be entirely true. Although housing production in 2025 is expected to increase to 39,540 units (39.2% lower than in 2024) and development value to 251,371 million baht (35.7% lower than in 2024), it appears that nearly 50,000 units have been sold, significantly reducing excess supply. This situation is considered good.

 

2. Mr. Yutthachai Tayarachakul, Managing Director of Personal Banking, UOB (Thai), stated that, considering the overall real estate market, the housing market in 2025 will be the first time in history, or once in a century, that the overall real estate and home loan industry is expected to be in a negative state this year in terms of new loan volume . Dr.Sopon commented that if we were to talk about a century, that is, 100 years, we would find that in 1925, which had just passed World War I, followed by World War II (until 1945), the Indochina War (ending in 1979), and numerous economic crises, all of which made the real estate market much worse than it is today.   Agency for Real Estate Affairs expects 39,540 new units launched in 2025, still exceeding the number launched during the economic crisis of 1997-2001 (when only a few thousand units were launched per year).

 

3. Dr. Amonthep Chawala, Senior Executive Vice President and Head of Research at CIMB Thai Bank, stated, "Even before the earthquake, due to significantly weakened purchasing power ... in the future, we may see the SM group gradually increasing their non-performing loans ... oversupply is beginning to shift ... in the high-end market." Dr.Sopon commented that the earthquake had no impact on the condominium market at all. A survey conducted one month after the earthquake showed that there were still many buyers of condominiums in buildings over 20 stories high. And at the end of the second quarter, purchasing power was still better than other types of housing. Some of the non-performing loans occurred because many banks were too lenient, allowing loans of 100%-120% of the home value.

 

4. The phrase "fear of a price war in the market" is simply rhetoric. Currently, detached houses priced at 20-30 million baht may be willing to be reduced by 2-3 million baht to attract buyers. This is because the project with some remaining units is to be closed quickly. Projects with price reductions of 20-50% are in reality "passing the mark." A quarterly survey by the Thai Real Estate Information and Appraisal Center found that when comparing prices in Q4 2024 with Q2 2025, selling prices were virtually unchanged. The average price decreased by only 0.31% . The automotive market (movable property) and the housing market (real estate) are as different as "sky and abyss."

 

In 2001, Dr.Sopon appraised real estate and auctioned off the properties for sale for the Financial Sector Restructuring Authority (FRA). The auction prices were on the average only 20% lower than the appraised value, not a significant drop. Today, a land development company's net profit may be as low as 15%, so a loss-making reduction is rare. The only exception is the case of Muang Thong Thani, which formerly in 2000 sought to sell assets to pay off debt, where a 50% reduction was the only one recently.

 

The decline in the real estate market, with fewer projects launches, is due to the poor economy. If the economy is strong, people will buy homes, real estate, personal property, watches, and various types of jewelry. Therefore, if the real estate market is to recover, we must revitalize the economy, promote strong exports, and attract foreign investment, rather than allowing investors to flow out of the country.

 

On the contrary, stimulating the economy by stimulating real estate purchasing power is impossible. It is only a rhetoric to help real estate businesses sell their products, shifting the burden to consumers.