Millennials expected to become an important buyer demographic in near future ; research suggests Thai government needs to issue controls on real estate prices
DDproperty, Thailand’s number one property portal, has revealed the findings of its Consumer Sentiment Survey for the first half of 2018, and found that most think property prices are too expensive and, combined with the current economic downturn, consumer satisfaction with the real estate climate has declined. The survey, which polled more than 1,000 people, also found that consumers want the government to issue new measures to support people in purchasing property and that the real estate market should keep an eye on the increasingly important Millennial demographic.
The DDproperty Consumer Sentiment Survey H1 2018 found that 70% of the survey’s participants thought that current properties are expensive or overpriced, while 61% also thought that the economy is not performing well, leading to dissatisfaction with the Thai real estate climate.
Due to such factors, real estate consumer satisfaction during the first half of 2018 dropped to 57%, which is down from 61% on H2 2017 and also down from a high of 68% three years ago. With less purchasing power, 61% of those surveyed agreed the government has not been doing enough to make housing affordable.
Respondents suggested that the government should provide more support for home buyers by, first, regulating prices of newly launched properties by developers (69%); second, providing more subsidies to first time home buyers (62%); and third, regulating supply of all property types (45%). However, 83% of consumers in the survey expect real estate prices to increase within 1 to 5 years. As for buying intentions, 41% are planning to buy a home within six months, up from 36% in the H2 2017 survey.
Mrs. Kamolpat Swaengkit, Country Manager for DDproperty commented that “DDproperty’s Consumer Sentiment Survey has focussed on consumer’s demand for housing, and it’s clear that it still exists. However, pricing appears to be the main barrier to buying, especially for first time buyers who are often new jobbers wanting to create a family but have low purchasing power. These first-time buyers, however, will need to make purchase decisions soon as property prices continue to trend upwards which will make entry into the market even more difficult.”
Moreover, 36% of respondents indicated that Outer Bangkok is their preferred location to purchase. Twenty-six percent intend to buy in the new Central Business District (CBD), which includes Ratchada, Ladprao, and Rama 9 areas, while 15% are interested in the Mid-Inner Sukhumvit area (Phrakanong, Onnut, and Udomsuk). With regards to property type, 58% said they are likely to purchase a single-detached house while 55% said they were likely to buy a condominium.
95% of respondents are looking to buy properties priced no higher than THB5 million, whereas 48% prefer a price of less than THB1 million, and 35% are looking at the THB2-3 million price range. The key factors that influence buyers’ decisions, aside from price, are firstly, the location (95%); secondly, infrastructure and available amenities (69%); and, thirdly the safety and security of the local area (64%).
Millennials To Become A Significant Real Estate Demographic
The survey also looked into the real estate potential of Millennials (18 – 34 years old) as a group. This group is expected to influence socio-economic change in the next 10 years and the survey found that 50% of Millennials are currently living with their parents. Of this group, the top five reasons for not moving out are: want to stay to take care of their parents , do not have enough savings to buy their own home , were not yet married , the family home is still big enough to stay in together , and they preferred to save their own money rather than buy a property.
However, 45% of Millennials still living with their parents plan to move out by the age of 35, and around 65% already have a monthly savings strategy to help them buy their own property in the future.
“DDproperty’s Consumer Sentiment Survey indicates that Millennials are expected to become a large group of real estate buyers in the near future as many are currently living with their parents. At the same time, a large number are already planning to move out and have a savings plan and are looking forward to a home of their own in the future. Our research shows their budget will be THB1-4 million, so maybe real estate developers should consider catering more for this demographic and price bracket in the future” added Mrs.Kamolpat.