The price index for condos in Greater Bangkok in the second quarter plunged for a second consecutive quarter as developers competed by offering massive discounts, says the Real Estate Information Center (REIC).
Vichai Viratkapan, the centre's acting director-general, said developers cut sales prices of condos to attract buyers, with purchasing power weakened by the outbreak.
"The lockdown caused closures and layoffs in many businesses, which had an impact on the purchasing power in the housing sector," he said.
Developers offered discounts as high as 36% to drain stock, particularly completed, ready-to-transfer units. Townhouses were discounted up to 32%, while the maximum discount for single detached houses was 12%, said Mr Vichai.
"If reductions trigger price wars, the impact may extend to the second-hand home market, which needs to lower unit prices to compete with new supply," he said.
Lower prices in the second-hand home market will affect asset appraisal values from financial institutions, possibly causing lower credit lines for mortgages. The REIC said the price index of condos in Greater Bangkok dropped to 153.2 in the second quarter from 153.4 in the first quarter, though it gained 1.8% year-on-year.
Mr Vichai said locations near BTS stations in Samut Prakan saw the largest drop on the condo price index as completed condos there offered heavy discounts. However, locations near new mass transit lines, including the Yellow and Orange lines, saw an increase on the index.
Phattarachai Taweewong, associate director of research and communications at property consultant Colliers International Thailand, said the Ramkhamhaeng area where the Orange Line will run was an attractive location for condos because of limited supply.
"New condo supply being launched at this location doesn't have to compete with existing supply as there are no new condo projects completed the past few years," said Mr Phattarachai.
REIC reported single detached houses and townhouses in Greater Bangkok saw a quarter-on-quarter drop of 0.1% in the price index to 126.6 and 130.2, respectively, but rose 2.3% and 1.5% year-on-year. REIC also surveyed the sentiment of housing developers in Greater Bangkok in the second quarter and found the index was lower than the median (50.0) for the fifth consecutive quarter.
Mr Vichai said developers' sentiment towards the property market remained negative, but their confidence was higher as lockdown restrictions were eased. Sentiment in the second quarter was 42.6, up from 41.2 in the first quarter.
Sentiment of listed firms rose to 45.7 from 41.7, but that of non-listed developers fell sharply to 38.0 from 40.5. The expectation index rose marginally to 51.8 from 51.5, exceeding the median as they hope for a recovery in the property market over the next six months, said REIC. Though respondents were wary because of a possible second wave of the virus. Expectations of listed companies rose to 57.0 from 54.8, while those of non-listed firms fell to 44.1 from 46.4.