Rising construction costs and land prices push housing estate prices higher despite slower demand. (File Photo) PATTAYA, Thailand – Prices for housing estates continue to rise steadily, though at a slower pace, as developers rush to clear increasing inventory in the market. The Real Estate Information Center (REIC) and the Government Housing Bank (GHB) report only slight price increases to align with the slowed purchasing power of consumers. Key factors driving the surge in housing estate prices include rising construction costs across the board. Land prices have notably increased, especially in prime locations near major transportation hubs and urban economic zones. Building materials costs continue to climb, and labor wages were raised again on January 1, 2025, with expectations of further increases. These rising costs have significantly pushed up overall project expenses, leading to continuous price hikes for new housing projects. In Bangkok, prices have risen most sharply in areas such as Phra Khanong, Bang Na, Suan Luang, and Prawet, with prices ranging from 7.51 to 10 million baht. Similarly, in the three adjacent provinces (Nonthaburi, Pathum Thani, and Samut Prakan), areas like Mueang Nonthaburi and Pak Kret have seen prices increase beyond 10 million baht compared to the same period last year. For townhouses in Bangkok, the biggest price increases occurred in Lat Phrao, Bang Kapi, Wang Thonglang, Bueng Kum, Saphan Sung, and Khan Na Yao districts, with prices between 7.51 and 10 million baht. However, some suburban areas in the three adjacent provinces, such as Bang Kruai, Bang Yai, Bang Bua Thong, and Sai Noi, experienced price reductions to stimulate the market and clear existing stock. Developers launch aggressive promotions to clear inventory amid fierce market competition. (File Photo) The housing estate price index in Bangkok rose 2.7% year-on-year and 0.9% quarter-on-quarter, while the three provinces showed a 2.6% year-on-year decline but a slight 0.2% increase quarter-on-quarter. Industry sources note that the sluggish economy and rising interest burdens force developers to absorb higher costs amid fierce competition. This has led to aggressive marketing campaigns, discounts, and giveaways to accelerate sales, significantly reducing profit margins. Another critical challenge is tightened lending standards by financial institutions, especially impacting mid- to lower-income buyers and even some upper-middle segments. This restricts market movement as companies listed on the stock exchange continue project launches to avoid stock price declines, despite the financial pressure. On the positive side, buyers with strong purchasing power and access to financing benefit from government measures such as reduced transfer and mortgage fees for homes priced up to 7 million baht and relaxed loan-to-value (LTV) rules allowing 100% financing. Developers also offer attractive promotions, although at the cost of reduced profits. Private sector proposals call for stronger incentives, including special interest rates and tax deductions on home purchases and mortgage interest without price caps, as well as easing lending restrictions to revive the property market this year.