Townhouse models on display at a House and Condo Fair. Townhouses in the mid to upper-end segments have shown signs of recovery, with average absorption rate growth between 2021 and 2024 of 11% per year for units priced 3-7 million baht and 26% for those priced 7-15 million baht. Somchai Poomlard

Sales of townhouses in the lower-end segment in Greater Bangkok have continued to decline this year, despite a reduction in new supply, primarily attributed to the economic slowdown.

Sumitra Wongpakdee, managing director of property researcher Terra Media and Consulting Co, said townhouses priced at 3 million baht or less were the weakest performers.

"The lower-end townhouse segment, which has the largest market share, faces a continued slowdown in new supply and absorption rates. This decline is driven by high bank mortgage rejection rates, hampering demand in this segment," she said.

In the first nine months of 2024, new townhouse launches priced at 3 million baht or less totalled around 9,000 units, compared with 15,000 units for all of 2023 and 14,100 units in 2022, which marked the lowest figure both pre- and post-pandemic.

The segment peaked in 2017 with 32,200 units before declining annually, hitting a nadir at 14,100 units in 2022. From 2021 to the first nine months of 2024, the average annual decrease was 12%.

The absorption rate for the segment also declined over this period, averaging a 2% decrease annually. The rate surged from 5.2 units per project per month in 2018-19 to a peak of 7.1 in 2020, before dropping to 5.5 in 2021. The rate then slightly recovered to 5.8 in 2022, but declined again to 5.7 in 2023 and 5.1 in the first nine months of this year.

"Low-priced townhouses are expected to worsen next year, as negative factors such as high household debt, stricter mortgage rules and elevated interest rates continue to impact demand," said Mrs Sumitra.

In contrast, townhouses in the mid to upper-end segments have shown signs of recovery, with average absorption rate growth between 2021 and 2024 of 11% per year for units priced 3-7 million baht, and 26% for those priced 7-15 million baht.

"Townhouses priced 7-15 million baht performed the best as demand in this range has rebounded, with buyers returning to inner-city locations after relocating to outer areas during the pandemic when working from home became necessary," she said.

The luxury segment, with units priced 15 million baht and higher, has not performed as well, with an absorption rate of only 0.2 units per project per month, the lowest in the market and down from 0.5 in 2022-23. However, this segment is not a concern as the annual new supply remains minimal, typically ranging from 100 to 200 units per year, with some years no new supply.