Bangkok Post – Residential market seen contracting 5-10% in 2025

The residential market is projected to contract by 5-10% this year, following a slowdown last year, as younger buyers delay home purchases because of reduced confidence in the economy, according to property research firm Terra Media and Consulting.

Sumitra Wongpakdee, the company’s managing director, said a recent survey found the consumer confidence index continued to decline, falling to 72 in 2024 from 76 in 2023 and 79 in 2022, after rebounding from 43 in 2020.

“Although consumers were not entirely lacking confidence, as 50 represents the neutral point, the index still fell from the year before,” she said.

Despite concerns about the economy, consumers felt their financial situation would improve in 2025. However, home purchases were being delayed due to a lack of confidence, despite an interest in buying.

“This is contributing to uncertainty in the market,” said Mrs Sumitra.

“The residential market in the first quarter of 2025 is likely to remain sluggish as there are no clear positive economic signals yet.”

According to Terra’s online survey conducted from September to October 2024 among 3,700 potential homebuyers, with 2,500 high-quality responses, the greatest concern was the Thai economy over the next 12 months.

Confidence in this area was 53, the lowest, marking a 20% decline — the largest year-on-year drop.

This was followed by confidence in the Thai economic outlook for the next five years, which dropped 12% to 71.

When asked about purchasing high-value products such as property and cars, respondents gave a confidence score of 64, down by 1%.

In contrast, the remaining two issues concerning their financial status showed the highest confidence.

Confidence in their financial status over the next 12 months was the highest at 95, up by 2%, while confidence in their current financial status compared with 2023 was 80, an increase of 10%.

The survey data, collected continuously since 2019, showed a declining trend in three-year home purchase intentions across all age groups, except for Baby Boomers, who represented 4%, with their intention increasing from 39% in 2023 to 43% in 2024.

“Baby Boomers wanted a new home as their existing ones no longer meet their needs for comfort or functionality, such as when their kids grow up and need their own spaces,” she said.

The intention to purchase homes has dropped consecutively from 51% in 2022 to 42% in 2023 and 36% in 2024.

Generations X, Y and Z, which accounted for 22%, 52% and 22%, respectively, all showed less enthusiasm in purchasing a home.

“The criteria of selecting respondents is restricted to those who are aware of at least one residential project, which demonstrates their intention to buy,” said Mrs Sumitra.

“The majority of them were Gen Y, reflecting that Gen Y is expected to drive residential demand in 2025.”

They returned after being largely absent in past years, likely due to limited budgets for home purchases previously, but now having sufficient funds to buy.