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With the rising demand for property continuing to show no signs of abating as demand for residential properties starts to pick up, the price of land for development has started to show signs of increasing during the 2nd quarter of the year.
Real Estate Information Center (REIC) has come out to say that land price index for the 2nd quarter of 2022 in Bangkok and its vicinities has seen an increase of as much as 4% quarter-on-quarter and as much as 6% year-on-year.
Wichai Wiratakaphan, the Acting Director of the Government Housing Bank and acting director of the REIC, said that this showed that pre-development vacant land prices have continued to rise but at a slower rate compared to the average figure for the past 5-years.
Factors causing the price of vacant land to increase at a slower rate was the economic slowdown that has been caused by the Covid-19 epidemic and, the impact of the war between Russia and Ukraine that has caused inflationary pressure across the world, prompting interest rate hikes.
To make matters worse is the fact that the government wants to collect all the taxes on the land & building. Up until now it has been giving a break on the taxes of up to 90% due to the economic crisis caused by the outbreak of Covid-19.
As a result of the policy, entrepreneurs have to consider purchasing less accumulated land to reduce the burden of land tax, which is the cost of project development in the next phase.
Despite the not so aggressive price rise, there were areas which saw a sharp increase in prices.
REIC’s Wichai said that during the 2nd quarter of 2022, the top 5 zones with the highest growth rate of land prices year-on-year were.
- Bang Phli – Bang Bo – Bang Sao Thong zone – This area saw a price change rate of up to 40.5%.
- Bang Kruai – Bang Yai-Bang Bua Thong – Sai Noi area – This area saw a price rise of 24.2%
- Mueang Nonthaburi – Pak Kret zone – This area saw a price change rate of 23.6%.
- Phra Khanong – Bangna-Suan Luang – Prawet area – This area saw a price rise of 12.3%.
- Samut Prakan-Phra Pradaeng – Phra Samut Chedi area – This area saw price rise of 8.5%.
“From the change in land prices above, it reflects that the land in the suburbs of Bangkok and its surrounding provinces has changed a lot in price because it is still affordable and still in demand for development as a low-rise residence. Meanwhile, land prices in the inner and middle tiers of Bangkok are already high, although there has been some increase, the change is not as high as in the suburb areas,” Wichai explained.
Mass Transit Areas
As for the price of vacant land before development along the route that passes by the sky trains in this quarter, it was found that the top 5 routes with the highest increase in land price growth compared to the same quarter of the previous year were mostly land under development of mass transit projects and routes with future construction plans, details as follows:
- Light Red Line (Taling Chan – Salaya), a project that would be under construction in near the future, has seen an increase in land price of 10.3% compared to the same period last year, with the highest land prices increase in the Thawi Watthana and Taling Chan district.
- Pink Line (Khae Rai – Min Buri), a project under construction with over 90.7% construction progress, has seen land price increase of 10.2% compared to the same period last year, with the highest land prices increase in the Laksi and Khan Na Yao district.
- Purple Line (Bang Yai – Tao Poon), a project that has been in operation since 2016, has seen an increase in land price of 8.53% compared to the same period last year, with the highest land price increase in the Mueang Nonthaburi and Bang Bua Thong district.
- Green Line (Samut Prakan – Bang Pu), a project that would be under construction in the future, and the Green Line (Bearing-Samut Prakan), a project that has been operational, the land prices on both routes grew by 8.51% compared to the same period last year, with the highest land prices increase in the Mueang Samut Prakan district.
- Blue Line (Bang Khae – Phutthamonthon Sai 4), a project that would be under construction in the future, saw an increase in land price of 8.1% compared to the same period last year, with the highest land prices increase in the Nong Khaem and Bang Khae district.