This year should be a challenging one for the residential property market, carrying over from a sluggish 2024 as insufficient domestic demand and a lack of structural support for foreign demand persist, says the Thai Condominium Association.

Prasert Taedullayasatit, the association's president, said while domestic demand exists, many potential buyers face difficulties securing mortgages, compounded by the absence of permanent government support measures.

"The issue with domestic demand is rising housing prices, which have eroded affordability for middle- and lower-income buyers, while upper-tier buyers are beginning to pull back," he said. "Subsidies are necessary."

Mr Prasert said the reductions in transfer and mortgage fees typically introduced during market slowdowns are only temporary. These short-term relief efforts do not address the need for sustainable, long-term solutions, he said.

Meanwhile, foreign buyers with strong demand face a lack of transparent legal frameworks for property ownership, particularly for landed houses, he said.

The only established provision is the 49% foreign ownership quota for condos.

Many foreign buyers resort to nominees or unconventional methods to acquire homes with land, underscoring the urgent need for structural reforms, said Mr Prasert, also chief operating officer of SET-listed Ananda Development.

He said 41% of Ananda's portfolio, totalling 12 billion baht, is derived from foreign buyers.

"Without this contribution, the company's sales and revenue would have decreased by 41%," said Mr Prasert.

Despite broader market challenges, total condo market transfers in Greater Bangkok to foreign buyers declined only 1% from 36.3 billion baht in the first 10 months of 2023 to 35.9 billion in the same period of 2024, reflecting the resilience of this segment, he said.

"However, no regulations govern foreigners' residences because of structural issues, which Thailand must address in the long term," said Mr Prasert.

He suggested measures to establish long-term leasehold contracts for both Thais and foreigners, not exceeding 60 years (with two contracts, each for 25-30 years), without allowing foreigners to own land.

Mr Prasert also proposed increasing the foreign ownership quota for condos from 49% to 75%, while limiting the area and organising residential regulations for foreigners as residents.

He recommended taxing property ownership and long-term leases by foreigners to set up a fund supporting homeownership for low- and middle-income individuals, establishing a permanent structure to benefit Thais.

With completed condo supply tallying a value of 141 billion baht this year, Mr Prasert said a significant portion remains unsold.

"Developers, eager to generate revenue, face a tough environment marked by limited demand and difficulties in issuing new debentures to refinance expiring ones. The market's ability to absorb this surplus remains uncertain," he said.

The impact of 2024's "perfect storm" of challenges will continue to ripple through 2025, said Mr Prasert. Last year was the worst in a decade for the sector, plagued by economic stagnation, high interest rates and an unprecedented mortgage rejection rate averaging 60-70%.

The aftermath was a 31% drop in sales, a 24% decline in new launches and an 8% reduction in transfers during the first nine months of 2024.