High property prices could possibly lead to a generation rent being born in Bangkok.
Escalating property prices in places such as the United Kingdom has made it harder for younger people to reach the property ladder. In some parts of the country prices have risen at such a rate that many first-time buyers need a significant deposit in order to be able to afford to buy a home. Couple this with rising student debts and home ownership is out of reach for many. That is unless the Bank of Mum and Dad steps in. Often having to help out with deposits, it is estimated that parents fund 25 percent of property purchases in the UK. This makes them the ninth biggest lender in the country.
For those not fortunate enough to be in this position has led to a generation of renters: ‘generation rent’. Property prices are far exceeding salaries plus there is a change in the way that people work. Millennials are demanding more flexibility so become freelancers, making it even harder to secure a mortgage.
Could Thailand follow suit?
In Thailand a similar pattern could be emerging. According to research by CBRE Thailand, millennials are less likely to be homeowners than previous generations. It is estimated that 50 percent still live at home. However many of these do want to own their own property but high prices mean that this is just a pipe dream.
Thailand has been a forerunner in ensuring that there are homes built for everyone. But millennials are struggling to do this within central Bangkok. Here CBRE estimates that the average property price is nine times the average income. But there is an opportunity to be a homeowner thanks to small units within Bangkok condominiums which have an attractive price point. Regardless of this millennials are not willing to just be the proud owner of any property, rather the property owner of the right one.
In order to ensure that Thailand does not lead to generation rent, developers need to focus on their needs. Building affordable condominiums that still have good access and conveniences. It may appear picky, but this will help ensure that a generation of renters is no reached like that of the UK.