The rising cost of land and construction is putting pressure on Thailand's housing market.

Thailand’s real estate market is experiencing increasing pressure as land and construction costs continue to rise, leading to higher prices for new homes and condominiums, reports Nation Thailand, citing data from the Real Estate Information Center (REIC). New housing prices have increased by 0.8%, while condominium prices have risen by 3.6%.

According to REIC, in the fourth quarter of 2024, the most significant price hikes for suburban houses were recorded in Min Buri, Nong Chok, and Lat Krabang. Meanwhile, condominium prices saw the sharpest increases in Huai Khwang, Chatuchak, and Din Daeng, where demand remains high. Suburban house prices grew by 0.8%, marking the ninth consecutive quarter of increases. The cost of new condominiums rose by 3.6%, continuing an upward trend for eight consecutive quarters. The primary drivers of these price increases are rising land prices, construction material costs, and labor expenses. This is particularly evident in high-demand areas such as central Bangkok and locations near major transport routes, where developers face limited land availability.

Price Trends by Region

Condominium prices in Samut Prakan and Nonthaburi provinces increased by 4.2%, surpassing the 3.4% rise in Bangkok. Analysts attribute this to active construction of new residential complexes and growing interest from buyers seeking more affordable properties outside the city center.

In Bangkok, the most significant price hikes—ranging between 3 and 5 million baht ($89,000–$149,000)—were recorded in Huai Khwang, Chatuchak, and Din Daeng. Demand in these areas is driven by their proximity to business districts and well-developed infrastructure.

In Bangkok’s suburbs, including Samut Prakan, Phra Pradaeng, and Phra Samut Chedi, the most noticeable price growth has been in homes priced between 2 and 3 million baht ($60,000–$89,000). This increase is linked to growing demand for affordable housing, especially among young professionals and families looking for comfortable residences near Bangkok.

To stimulate demand, developers are offering more incentive programs, with the share of properties featuring cash discounts rising from 21.7% to 25.2% compared to the previous quarter.

Bangkok’s Real Estate Market

The price index for new housing in Bangkok and surrounding areas reached 131.4 points, 0.8% higher than a year earlier. In Bangkok itself, prices increased by 2.3%, while neighboring provinces (Nonthaburi, Pathum Thani, Samut Prakan) saw a 1% decline, primarily due to a temporary drop in demand for townhouses amid increased supply.

Standalone house prices rose by 2.1% year-on-year, while townhouse prices saw only a 0.3% increase. However, experts predict that townhouse demand may rebound in 2025. Cash discounts for townhouses have also risen—from 21% to 29.6% in a single quarter—indicating that buyers can still secure attractive deals despite overall price growth.

The steepest increase in standalone house prices in Bangkok was observed in Min Buri, Nong Chok, and Lat Krabang, where prices surpassed 10 million baht ($298,000). In suburban areas, Lam Luk Ka, Khlong Luang, and Thanyaburi saw significant growth, with property values ranging from 7.5 million baht ($223,000) to over 10 million baht. These locations are experiencing a surge in new residential developments.

Townhouse prices recorded the highest increases in districts such as Phra Khanong, Bang Na, Suan Luang, and Prawet, where properties now range between 5 and 7.5 million baht ($208,000+). Similar trends were observed in neighboring provinces, including Bang Kruai, Bang Yai, Bang Bua Thong, and Sai Noi, where townhouses are priced between 2 and 3 million baht ($60,000–$89,000). Strong demand in these areas is driven by improved transport accessibility and expanding infrastructure.

Rising Construction Costs

The Housing Construction Cost Index (HCCI) reached 139.9 points, up 4% year-on-year. This increase is primarily due to rising prices for building materials and labor, which ultimately affect housing costs. Over the past year:

Plumbing equipment has surged by 12%, driven by higher prices for imported components.
Ceramic tiles have risen by 5.6% due to increasing production costs.
Electrical and plumbing materials have increased by 3.7%, reflecting rising costs of copper and plastics.
Wood and wood-based products have grown 2.2% in price, impacted by supply shortages and higher demand.
Overall construction material costs have climbed by 5.7%, influenced by fluctuations in global oil and energy prices.
Labor costs have risen by 4%, further adding to overall building expenses.
These rising costs have pushed up housing prices, even as household purchasing power declines due to slower economic growth. Developers are increasingly concerned about affordability constraints, prompting them to offer discounts and other incentives to attract buyers.

Government-backed mortgage subsidy programs are expected to provide some relief in early 2025 by offering more accessible financing options. However, experts warn that if construction costs continue rising, property prices will remain high, potentially slowing demand.

Investment Risks

While investing in Thai real estate can be lucrative, there are risks to consider, particularly regarding property ownership restrictions.

Foreign Ownership Restrictions: Foreigners cannot own land in Thailand outright, with only long-term lease options available. These leases, however, do not provide the same level of security as full ownership.
Company Ownership: Some foreign investors acquire property through Thai-registered companies, but this approach comes with additional legal and financial obligations, including setup and maintenance costs. If legal violations are detected, authorities may annul the transaction, leading to financial losses.
Condominium Ownership: Foreigners can purchase condominium units, provided that foreign ownership in the building does not exceed 49% of total units. Even in this case, market research is essential to minimize risks.

Market Outlook

Experts predict a growing demand for environmentally friendly properties. The number of green-certified buildings in Bangkok has increased from 17 in 2019 to 48 in 2024, with projections suggesting 85 by 2029.

Chinese buyers are expected to remain the dominant foreign investors, particularly in major cities and tourist hotspots like Bangkok, Pattaya, and Phuket. Over the past 15 years, Chinese investors have poured over 100 billion baht into Thailand’s property market.

There are ongoing discussions about loosening restrictions on foreign real estate investments, but no significant legal changes have been implemented yet. Meanwhile, rental yields in Bangkok may decline due to an oversupply of new residential developments, making it more challenging for property owners to attract tenants.

If construction costs and property prices continue to rise, affordability concerns may further impact the market. However, with the right investment strategy, certain areas—especially those with strong infrastructure and sustainable development—could remain profitable in the long run.