A visitor examines a model of a condo project at House & Condo Expo held in March. Mr Vichai says while many people wish to purchase a home, some are not financially prepared. (Photo: Varuth Hirunyatheb)

The housing purchase confidence index (HPCI) in Greater Bangkok for the first quarter of 2024 dropped from the fourth quarter of last year, likely the result of gradually increasing policy interest rates throughout 2023.

Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC), said five interest rate increases in 2023 continue to affect home purchasing power this year.

“Interest rates remain high, directly affecting home purchasing power,” he said.

“During an economic slowdown, people are more cautious about spending. Overall household debt is higher than 90% of GDP.”

According to the REIC, the HPCI in the first quarter of 2024 was 39.2, down from 44.5 in the fourth quarter of 2023.

An index below 50 indicates potential homebuyers have low or minimal confidence levels.

“Although many people want to buy a home, some are not financially prepared,” said Mr Vichai.

“This led to concerns about applying for mortgages from financial institutions, as some applicants risk rejection.”

Both the number of housing transfers in Greater Bangkok and their total value decreased by 24% and 25.2% in the first quarter from the fourth quarter of 2023, respectively.

The REIC calculated the HPCI by interviewing participants at the House & Condo Expo held from March 21-24, as well as by surveying respondents on its website.

Respondents were 18 and older with plans to purchase a home.

Roughly 53% were female and 52% were aged between 25 and 34, falling within the Generation Y and Z demographics.

In addition, 61% of the respondents were employees and 36% earned an average monthly income of 15,001-30,000 baht.

One-third wanted to purchase a home for their own use, 18% for investment or rental purposes, and 15% looked at the purchase as an asset.

This indicates those seeking to purchase homes prioritise investment, wealth accumulation and stability in life, according to the REIC.

Compared with the previous quarter, in the first quarter the purpose of investment or rental increased to 18% from 10%.

Buyers wanting to settle down with their family or for marital purposes rose to 12% from 8%.

More people were interested in second-hand homes in the period, as the proportion of those wanting to buy a new home dropped to 39% from 42% in the fourth quarter of 2023, while those wanting to buy a second-hand unit rose to 8% from 7%.

The proportion of respondents seeking units priced 10-15 million baht and 15-20 million rose to 4% and 5%, respectively, from 1% and 0.3%, while 51% wanted to buy units priced from 2-5 million baht.

The most popular locations in Bangkok were areas along the mass transit lines, near jobs or communities such as Rama IX, Bang Na, Bang Kae, Lat Phrao and Huay Khwang.