Miniature models of houses on display at a recent property fair. Mr Vichai said developers saw decreases in housing sales and transfers for several quarters due to lower purchasing power and weak demand. (Photo: Varuth Hirunyatheb)

The residential construction area permitted nationwide in the first three months of 2024 is expected to plunge to the lowest level in 12 quarters, reflecting developers slowing new launches of residential supply because of weak demand.

Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC), said the poor sentiment has worried developers, making them hesitant to expand their business or make new investments.

"Developers reported decreases in housing sales and transfers for several quarters because of lower purchasing power and weak demand," he said. "The key factor was homebuyers' inability to obtain mortgages."

The number of residential transfers nationwide had five consecutive year-on-year drops of 0.8%, 4.4%, 6.9%, 12.7% and 13.8% from the first quarter of 2023 to the first quarter of 2024.

The number in the first quarter of 2024, totalling 72,954 units nationwide, was also the lowest in 25 quarters, according to REIC.

In January 2024, the most updated data indicated the residential construction area permitted nationwide tallied 2,959,578 square metres, a decline of 6.3% year-on-year.

REIC estimated the residential construction area permitted nationwide in the first quarter of 2024 would total around 8.88 million sq m, reflecting a drop of 12% year-on-year.

This would mark the fourth consecutive year-on-year drop since the second quarter of 2023, with declines of 4.3%, 3.5% and 5.9% respectively.

It would also be the lowest since the second quarter of 2021, which had 8.76 million sq m.

From the third quarter of 2021 to the fourth quarter of 2023, the total residential construction area permitted nationwide ranged from 9.26 million sq m to 10.1 million sq m.

The largest year-on-year drop in January 2024 was that of low-rise houses with a decrease of 6.7% to around 2.76 million sq m, while that of condos slightly rose to 196,710 sq m from 196,613 sq m.

"If the economic recovery is as robust as expected and the property measures have a strong impact on home demand, developers may begin expanding their business and making new investments in the second half," said Mr Vichai.

REIC expects the residential construction area permitted nationwide by the end of 2024 to grow by 4% to 40.3 million sq m.

The figure was upgraded from an estimated 3.5% growth on Feb 15 before the property measures were announced in April.