Warning! House Prices Set to Rise 10% Due to War Impact and Oil Costs Finance Sector Predicts Real Estate Slump to Lowest in 8 Years

KKP's business lending division has issued a warning about a "Perfect Storm" facing Thailand's real estate market in 2026. With costs rising across the board, they forecast property transfers will plunge to 290,000 units, marking the lowest point in nearly a decade (8 years).

Rising oil prices are driving a new baseline for housing costs.

KKP assesses that conflicts in the Middle East have pushed global crude oil prices beyond 110-120 dollars per barrel, triggering a domino effect of soaring transportation and building material costs.

• Steel and structural materials, which constitute 18% of house prices, are highly sensitive to transportation and global energy costs. If war breaks out as projects commence, costs will spike immediately from day one.
• Systems and architectural work, accounting for over 12%, include PVC pipes, electrical wiring, and house paint — all petrochemical products whose prices rise in tandem with oil prices.
• KKP points out that we are entering a new cost baseline phase, which will inevitably force new housing projects to raise prices by an additional 5-10%.

Rising living costs shrink purchasing power, delaying homeownership dreams.

While house prices are set to increase, Thai consumers’ wallets are shrinking due to a broad rise in living expenses.

1. Income is increasingly consumed by essential expenses: as fuel and consumer goods prices climb, savings for home down payments or mortgage payments decrease.
2. Rising interest rates: Energy-driven inflation pressures central banks, including Thailand's, to maintain high interest rates. Even a 1% increase in mortgage rates could raise monthly payments by thousands of baht or reduce borrowing capacity, making dream homes unaffordable.

Three critical zones with high unsold housing inventory.

• Rangsit-Pathum Thani: 19,300 units (valued at 67 billion baht).
• Bang Bua Thong-Nonthaburi: 18,100 units (valued at 63 billion baht).
• Bang Na-Samut Prakan: 16,400 units (valued at 57 billion baht).

Survival strategy: "Lock costs and seize existing inventory."

Despite the bleak overall picture, KKP views this as a "final golden opportunity" for those prepared before new prices take effect.

• Buying existing stock homes means acquiring properties already built at "old cost" prices, not yet affected by inflation and increased transportation costs—effectively an indirect discount.
• Locking in fixed interest rates: In a volatile interest rate environment, signing contracts now with fixed rates for the first 1-3 years offers the best protection.
• Special deals from developers: To maintain cash flow, developers are offering extensive promotions—discounts and bonuses—to clear existing stock, giving buyers strong bargaining power.

Meanwhile, Anankorn Amornwathee, President of the Home Builder Association (HBA), echoes the warning, advising consumers planning new home builds to prepare for cost increases that may raise prices by approximately 3-5% from current levels.

For those ready to proceed, signing contracts now locks in current costs before major price hikes begin after April, ensuring budgets remain controlled despite economic volatility," Anankorn said.

Ultimately, while the Middle East conflict may seem distant, its ripple effects through the global economy—including energy prices, inflation, interest rates, currency values, and consumer confidence—directly affect Thai homebuyers' purchasing power. Monitoring global developments closely is no longer optional, as events abroad could crucially determine the ease or difficulty of homeownership in Thailand's future.

Source: KKP

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