Condo prices jump at the lower end of the scale

While prices for all classes of residential real estate in greater Bangkok rose in the first half of 2013, it was noticeable that the biggest area of increase in percentage terms was in the lower end of the condominium scale.

According to the Real Estate Information Center (REIC), the price index for condos priced at 49,999 baht per square metre or less rose by 8.1 percent in the first six months of this year.

This compares to a 7.2 percent increase in prices for condos rated as mid-range in terms of pricing, that is, between 50,000 and 79,999 baht per square metre. The areas where the biggest increases took place include Chatuchak, Bang Kapi, and Ratchadaphisek Road.

For condos priced at 80,000 baht per square metre or more the price increase was a far more modest 5.5 percent. The areas with the largest price increases in Bangkok were Pathumwan, Ratchathewi, Wattana, Phra Khanong, and Sathon.

Of course one of the major drivers of this increase has been the surge in the cost of construction materials and wages. As might be expected, the majority of construction workers are classified as unskilled and the minimum wage is now set at 300 baht per day for labourers. The knock-on economic effect of the rise in wages naturally leads to an increase in the cost of construction materials and developers, naturally, will pass on these increases in the prices they charge for the finished product.

REIC only began their condo price index survey in the first half of 2010. A year later they started tracking the prices of townhouses and single houses. They use the price index from the second half of 2009 as the base year for all three housing types.

REIC notes that prices for single houses and townhouses in the greater Bangkok area have risen by 5.1 and 5.9 percent respectively.

There is a difference between single house price rises in Bangkok central compared to the satellite provinces of Nonthaburi, Pathum Thani, and Samut Prakan. In the former, single house prices have jumped 5.3 percent while in the latter the increase has been just five percent.

Yet the prices of townhouses in both central Bangkok and greater Bangkok (that is, the three above-mentioned satellite provinces) have jumped almost equally at 5.8 and 5.9 percent respectively.

According to the chart by REIC shows the gap between condos and single houses has widened quite noticeably over the past four years or so. In the second half of 2009 the REIC index rated a townhouse at 101.9, a single house at 100.4 and a condo at 100.0. Those figures are now 118.4, 112.8 and 123.9 respectively.