What To Know
- Thailand’s property market is on the verge of its most severe crisis in history, with industry-wide home loan growth set to turn negative for the first time in 2025.
- At the same time, banks are tightening credit not only for low and middle-income earners but also for high-income groups, adopting a more risk-averse approach in the face of a weakening economy.
Bangkok Business News: Historic Downturn Grips the Market
Thailand’s property market is on the verge of its most severe crisis in history, with industry-wide home loan growth set to turn negative for the first time in 2025. A toxic combination of sluggish consumer purchasing power, a massive housing oversupply, and increasingly strict lending criteria by banks is crippling the sector. Unlike the COVID-19 slump, which was temporary, the current downturn is structural and far-reaching, spreading from budget properties to mid-range and even luxury developments. Experts warn that a destructive price war among developers could erode homeowner wealth and destabilize the nation’s financial system. In the middle of this turmoil, this Bangkok Business News report finds that the challenges are deep-rooted and could have lasting consequences.
Thailand’s real estate sector is in a total melt-down state
Image Credit: AI-Generated
Shifting Consumer Behaviour and Bank Caution
Consumers are now more cautious than ever, delaying purchases and avoiding large investments like property amid fears over future income stability. Sales have slowed sharply, and mortgage applications are down as buyers take longer to commit. At the same time, banks are tightening credit not only for low and middle-income earners but also for high-income groups, adopting a more risk-averse approach in the face of a weakening economy. Financial experts notes that lenders must protect themselves from rising risks ad are also stating that the current market is the worst in a century.
Debt Burden Reaches Dangerous Levels
Household debt in Thailand has ballooned to 90% of GDP, totalling 16.2 trillion baht in early 2025. Housing loans make up nearly 38% of this, with over 200 billion baht in non-performing loans and another 575 billion baht at risk of default. Economic growth remains stagnant at just 2% in 2024 and a projected 1.5% for 2025, compounding the crisis. The “Responsible Lending” index has led banks to reject more than 45% of applications, resulting in a 20–30% quarterly drop in new housing sales. Property transfers have fallen by up to 10% compared to 2023, hitting condominium developers hardest.
Corporate Bond Defaults Mounting
The strain has spread to corporate finance, with developers struggling to meet bond repayments. In the first half of 2025 alone, one firm defaulted on 300 million baht, while five others sought extensions on nearly 8 billion baht in debt. With 95 billion baht in bonds maturing this year, rollovers are becoming harder to secure, fuelling what some experts call an “economic time bomb.”
Pathways to Survival
Specialists are urging urgent, coordinated action between developers, financial institutions, and the government. Suggested measures include aggressively clearing existing stock with discounts and rent-to-own schemes, converting projects into REITs, restructuring debt, delaying new builds, cutting costs, and diversifying into businesses with recurring income streams. Without such interventions, the sector risks prolonged stagnation, falling prices, and widespread financial instability.
The Thai real estate market now stands at a crossroads. If decisive measures are not taken, the structural weaknesses, mounting debt burdens, and potential price wars could cause a long-term erosion of property values and investor confidence. The coming months will determine whether Thailand’s property sector can stabilize or slide further into a downturn with lasting repercussions for the entire economy.
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