Housing sector latest victim of war

With the Middle East conflict and a stagnant domestic economy stunting demand, the Thai real estate market looks poised for another year of decline

PUBLISHED : 11 May 2026 at 07:12

WRITER: Kanana Katharangsiporn

- 13

Given the sagging economy and conflict in the Middle East, the residential market is expected to contract for a fourth consecutive year in 2026, weighed down by persistent high household debt, rising living costs and tight lending, according to Siam Commercial Bank Economic Intelligence Center (EIC).

Total nationwide housing transfers in 2026 are forecast to decline by 5% year-on-year to 824 billion baht.

In a prolonged conflict scenario, the contraction could deepen to 10-15%, reflecting fragile purchasing power and heightened uncertainty.

## SHRINKING DEMAND

"A key concern remains tightening mortgage approvals, with rejection rates exceeding 50-60%," said Surachet Kongcheep, head of research at property consultancy Cushman & Wakefield Thailand.

Although government measures such as incentives for homes priced less than 7 million baht and relaxed loan-to-value (LTV) rules were introduced, they have yet to translate into a meaningful recovery in demand, he said.

Demand has weakened across segments. Middle- to lower-income buyers are constrained by rising expenses outpacing income, while mortgage approvals remain stringent, according to EIC.

High-income buyers are delaying purchases and investments amid economic uncertainty.

The Middle East conflict is expected to further dampen sentiment, increasing living costs and discouraging both domestic and foreign buyers.

While stimulus measures such as LTV relaxation and reduced transfer fees remain in place, their impact has been limited.

The pace of recovery in the second quarter will depend on improvements in consumer confidence following the formation of a new government, as well as potential extensions or new measures to support the property sector, noted the think tank.

The Middle East conflict is denting buyer sentiment, raising living costs and discouraging both domestic and foreign buyers.

## ALL SEGMENTS SLOWING

Kessara Thanyalakpark, managing director of SET-listed developer Sena Development, said the residential market was projected to rebound this year, but could contract amid escalating tensions involving the US, Israel and Iran.

"Last year's market contraction was significant, and we anticipated a gradual recovery this year," she said. "But since the conflict began in late February, market conditions are now expected to weaken compared with last year."

EIC expects residential sales in Greater Bangkok to decline in 2026 across all segments, including mass and high-end housing, as economic uncertainty weighs on purchasing decisions.

For single detached houses and semi-detached homes, demand from middle-income buyers, which is the core segment for units priced less than 20 million baht, is expected to weaken due to slower income growth and rising living costs.

Homes priced more than 20 million baht are also likely to see slower sales, as high-income buyers delay purchasing decisions amid uncertainty, while a portion of demand was already absorbed in previous years, noted EIC.

Semi-detached houses priced between 5-10 million baht may offer a relative bright spot, attracting middle-income buyers seeking better value and locations closer to the city compared with similarly priced single detached homes.

Townhouses, which target lower- to middle-income buyers, continue to face fragile demand, compounded by declining popularity and intense competition from lower-priced second-hand homes and condos in similar price ranges.

In the condo segment, demand from lower- to middle-income buyers remains sluggish, particularly for units priced less than 5 million baht as mortgage rejection risks remain high due to tighter lending conditions, said the think tank.

Meanwhile, condos priced above 10 million baht are also expected to slow, in line with more cautious purchasing and investment decisions among high-income buyers.

However, ultra-luxury branded residences are likely to remain resilient, supported by demand from wealthy individuals, said EIC.

Property projects targeting the middle class and lower-income buyers have fragile demand, prompting developer competition.

## FOREIGN SHIFTS

Purchasing power from Chinese buyers is expected to continue to decline, while the Middle East war is likely to weigh on foreign demand by dampening sentiment and delaying investment decisions.

The conflict is expected to depress foreign buying activity in the short term. However, it may also create opportunities from wealthy individuals seeking relocation or safe-haven assets amid geopolitical uncertainty.

Demand from Middle Eastern buyers remains limited, accounting for only about 1% of total foreign condo transfer value, suggesting a relatively small direct impact on Thailand's foreign market.

In recent years, geopolitical tensions have redirected demand from affluent buyers in markets such as Russia, Taiwan and Myanmar, who have increasingly turned to Thailand as a destination for both investment and residence.

Foreign condo demand continues to support Thailand's housing market during periods of domestic weakness. In 2025, the number of foreign transfers continued to grow, despite a decline in total transaction value. This reflects a structural shift in demand, with foreign buyers increasingly favouring mid-priced units over high-end properties, moving towards more practical, end user purchases rather than speculative investment.

## SECOND-HAND RESILIENCE

The second-hand housing market is expected to contract this year in line with overall conditions, though its share will remain relatively high due to affordability advantages and abundant supply.

Resale transactions are projected to account for 50-55% of total transfers in Bangkok and its vicinity, similar to 2025 levels, reflecting continued demand for lower-priced options.

Second-hand homes remain attractive in locations where new supply is limited, particularly in inner Bangkok and fringe areas between the inner and middle zones.

The Middle East conflict might slow foreign demand, but it could also create opportunities from wealthy buyers seeking relocation.

The existing measures, including incentives for homes priced below 7 million baht and relaxed loan-to-value (LTV) rules, could not translate into a significant recovery in demand. (Photo: Pornprom Satrabhaya)

## SUPPLY DOWNGRADE

Developers are expected to exercise caution, focusing on clearing inventory while limiting new launches.

New residential launches in Bangkok and its vicinity are projected at 39,000 units in 2026, down 5% year-on-year.

This follows a sharp contraction of 30-40% in 2024-2025, marking the fourth consecutive year of declining new supply. In a prolonged conflict scenario, new launches could fall by up to 10%.

The slowdown in new supply is expected to reduce inventory for a second straight year to roughly 212,000 units, down 4% year-on-year, noted EIC.

However, rising construction costs driven by higher energy and material prices are limiting developers' ability to raise selling prices, putting pressure on profit margins.

## DEVELOPERS ADJUSTING

In the short term, developers are expected to launch projects more selectively, avoiding locations with high inventory and targeting segments less affected by economic uncertainty.

Strategies include expanding into high-income and foreign buyer segments, offering rental or rent-to-own models, and launching smaller projects to improve liquidity and accelerate sales.

Developers are working more closely with contractors to manage costs, from design optimisation to construction processes, including efficient material procurement and reducing waste.

In the medium to long term, new projects are expected to align with emerging consumer trends such as wellness, ageing society needs, pet-friendly living, and luxury branded residences targeting wealthy buyers.

Developers are focusing on sustainability, including energy-efficient homes, solar rooftops, electric vehicle chargers and smart home technologies, alongside partnerships with financial institutions to support green housing finance.

Subscribe to our newsletters for daily updates, breaking news and exclusive content.

- Thailand housing market

- Property sector outlook

- Mortgage approval rates

- Residential real estate

- Bangkok property trends

- Housing demand forecast

- Condo market analysis