A building under construction in Bangkok's Thong Lor area on April 5. Effective as of January 2024, the daily minimum wage for unskilled workers nationwide rose between 2-16 baht to a range of 330-370 baht. Bloomberg

The new daily minimum wage, which became effective in early January, drove up home construction prices in the first quarter, despite a drop in costs due to the influx of Chinese steel and the delayed disbursement of the government's budget.

Vichai Viratkapan, acting director-general of the Real Estate Information Center (REIC), said the construction price index for standard homes in the first quarter of 2024 rose 2.3% year-on-year to 137.5 and increased 2.2% from the fourth quarter of 2023.

"The index has been on an upward trend since the third quarter of 2024, but with a slight increase," he said. "Key drivers were a 6.1% increase in minimum labour wages, followed by payments for architecture jobs with an increase of 4.7%."

Effective as of January 2024, the daily minimum wage for unskilled workers nationwide rose between 2-16 baht to a range of 330-370 baht.

This increase led to a rise of 6.1% in labour costs for home construction in the first quarter of 2024, compared with the corresponding period last year.

Payments for other jobs decreased year-on-year, led by structural engineering jobs with a drop of 2.5%, followed by electrical and communication system jobs with a decrease of 1.9%, and sanitary system jobs with a decline of 0.3%.

Prices of construction materials dropped across all categories, except for wood and wooden products with a year-on-year increase of 7.2% and a quarter-on-quarter increase of 2.6%.

The largest year-on-year decrease in prices was in steel and steel products, which saw a decline of 9.2%, driven by the trend of falling prices in the Asian and Chinese steel markets.

"In Thailand, steel prices were also pressured by the influx of steel from China which continued to produce the bulk of steel despite reduced domestic demand," said Mr Vichai.

As China redirected its steel to the Southeast Asian region and Thailand due to lower domestic demand, intense price competition ensued. Thailand's imports of steel from China and other countries led to an overall decrease in steel prices in the country.

The second largest year-on-year decrease in prices was in sanitaryware, which recorded a drop of 8.9%. It stemmed from decreasing demand from the public sector's construction projects during a vacuum period in terms of the fiscal budget, and from the property sector which slowed down due to lower purchasing power.