A model of a condo project on display at a recent edition of House & Condo Expo. The condo sales rate in the second quarter improved to 43% as the drop in supply was larger than the drop in demand. Varuth Hirunyatheb

The high mortgage loan rejection rate in the first quarter of 2024 caused condo developers to put the brakes on new launches in Greater Bangkok in the second quarter, likely leading to a new low in launches by the end of the year.

Sunchai Kooakachai, director and head of research and advisory at property consultant Knight Frank Thailand, said the number of new condo units launched in Greater Bangkok in the second quarter of 2024 decreased 39% year-on-year.

"Household debt is the major factor causing the high mortgage loan rejection rate, putting pressure on the housing market this year," he said. "It remains high -- at more than 90% -- due largely to a gradual economic recovery."

According to a Bank of Thailand survey among five major banks, the home loan approval ratio in the first quarter of 2024 declined again to 23.4%, after recovering from 21.7% in the first quarter of last year to 38.7%, 30.8% and 36.1% in the second, third and fourth quarters of 2023, respectively.

The approval ratio slightly improved to 25% in the second quarter of 2024, but remained low as home loan demand declined by 7.8%.

This marked the third consecutive decline since the fourth quarter of 2023, when demand fell 7.1%, followed by a 10.1% drop in the first quarter of 2024.

Knight Frank reported that the condo sales rate in the second quarter improved to 43% as the drop in supply was larger than the drop in demand.

The new supply stood at 7,321 units, while new demand was 3,145 units, compared to 11,930 units and 3,324 units in the same period last year.

"Condo sales rates have not exceeded 50% since 2020, even when the market recovered post-pandemic in 2022," said Nattha Kahapana, managing director. "The new condo supply launched this year will likely be below 20,000 units."

In a normal situation, the number of new condo units launched in Greater Bangkok averages around 50,000-60,000 units per year.

"Developers adopted a wait-and-see approach and were more cautious as the sales rate might not be as strong as they expected," said Mr Nattha. "Units priced below 120,000 baht per square metre and located near a mass transit line had the strongest sales."