For anyone considering a property purchase on Phuket, the central question right now isn’t simply how the wider Thai market has shifted, but whether a nationwide housing slowdown will hit island demand in the same way it’s affecting the capital.
Research from Siam Commercial Bank’s Economic Intelligence Center (EIC) suggests that Thailand’s residential sector is set to contract for a fourth straight year in 2026. Nationwide housing transfers are projected to fall by around 5% year-on-year, landing near 824 billion baht. Should conflict in the Middle East drag on, that decline could widen to between 10% and 15%.
Behind these figures lies a familiar combination of pressures: weak purchasing power, elevated household debt, rising day-to-day costs, and unusually strict mortgage lending.
Why the Slowdown Matters
The real story isn’t that demand has cooled — that has been obvious since 2023. The more striking issue is that the government’s attempts to revive the sector simply haven’t produced a turnaround.
Stimulus tools such as relaxed loan-to-value rules and reduced transfer fees on homes priced below 7 million baht are still in place, yet buyers remain hesitant. Surachet Kongcheep, who heads research at Cushman & Wakefield Thailand, points out that mortgage rejection rates are now running above 50–60%. That is a structural problem, not a passing wobble.
Middle- and lower-income households are squeezed by living costs that are outpacing wage growth, while wealthier buyers are holding off as they wait to see how the wider economic picture develops. Tensions in the Middle East are expected to add another layer of caution, lifting living costs and discouraging both Thai and international buyers.
What the Numbers Reveal
The EIC expects residential sales across Greater Bangkok to slip in every segment in 2026, from mass-market to high-end.
Detached and semi-detached homes priced under 20 million baht are likely to see softer demand as middle-income earners struggle with slower income growth and rising expenses. Properties above the 20 million baht mark may also stagnate, as affluent buyers postpone big decisions. Within that group, semi-detached houses in the 5–10 million baht range could be a relative bright spot, drawing buyers who want better value and closer-in locations than equivalent detached options.
Townhouses, traditionally a stepping stone for lower- and middle-income buyers, continue to face thin demand, pressured by waning popularity and stiff competition from cheaper second-hand homes and condos.
In the condo market, appetite among lower- and middle-income buyers remains subdued, especially for units priced below 5 million baht where mortgage rejection risk is high. At the other end of the scale, condos above 10 million baht are also expected to slow as wealthy buyers approach purchases and investments more cautiously. One outlier is the ultra-luxury branded residence segment, which the EIC believes will stay resilient thanks to continued demand from high-net-worth individuals.
How This Plays Out in Phuket
Phuket’s property scene runs on a different engine than Bangkok’s. The island is driven by foreign buyers, lifestyle-focused investors, retirees and long-stay visitors. Domestic buyers from Bangkok form part of the picture, but they aren’t the dominant force in the villa or high-end condo segments.
Where the national slowdown does bite for Phuket is in two specific areas: domestic buyer confidence and the lending climate at Thai banks.
If mortgage rejection rates are sitting above 50–60% nationally, Thai buyers eyeing Phuket face exactly the same hurdles. And if high-income Thai buyers are postponing purchases in Bangkok, they are very likely doing the same in Phuket.
That said, Phuket’s international buyer base plays by different rules. Foreign purchasers typically pay in cash or arrange financing outside Thailand, which insulates them from local mortgage trends. What does affect them is geopolitical uncertainty, currency swings and broader confidence in Thailand as a stable place to invest.
The Foreign Buyer Picture
The EIC expects purchasing power from Chinese buyers to keep softening, while the Middle East conflict is likely to weigh on overall foreign demand in the short term by dampening sentiment and pushing investment decisions further out.
On the flip side, the same report notes that geopolitical instability can also create opportunities. Wealthy individuals looking for relocation options or safe-haven assets have, in recent years, increasingly looked to Thailand from markets such as Russia, Taiwan and Myanmar — drawn both as investors and as residents.
Direct demand from Middle Eastern buyers, by contrast, remains modest, accounting for roughly 1% of foreign condo transfer value, so the direct hit to Thailand’s foreign market from that region is limited.
For Phuket, the open question is whether the current uncertainty erodes foreign buyer confidence overall, or whether it actually nudges demand from other regions toward Thailand as a comparatively steady Southeast Asian option.
What Is Still Unclear
Kessara Thanyalakpark, managing director of SET-listed developer Sena Development, has noted that the residential market was expected to bounce back this year, but could just as easily contract as tensions between the US, Israel and Iran escalate. She has acknowledged that the contraction in 2024 was substantial and that, while a gradual recovery had been anticipated, conditions since late February have shifted the outlook the other way.
The EIC adds that any second-quarter recovery will hinge on whether consumer confidence improves alongside the formation of a new government, and whether existing support measures are extended or new ones introduced.
For Phuket buyers specifically, the detail worth watching is whether policy support starts to pivot away from mass-market Bangkok housing toward foreign buyer incentives, long-stay visa reform or infrastructure investment in tourism-led regions.
Frequently Asked Questions
Does the national housing slowdown hit Phuket the same way it hits Bangkok?
Not quite. Phuket leans much more heavily on foreign buyers, lifestyle investors and tourism-driven demand than on local mortgage-reliant buyers. That said, tighter lending conditions and cautious high-income Thai buyers do still influence Phuket’s domestic segment.
Are Thailand’s mortgage rejection rates affecting foreign buyers in Phuket?
Less directly. Foreign buyers usually pay cash or use financing from outside Thailand, so local mortgage trends matter less to them. However, geopolitical tension and currency volatility can still push their decisions back.
Could the Middle East conflict reduce foreign demand in Phuket?
In the short term, yes — the EIC expects sentiment to take a hit. But the same uncertainty can also redirect wealthy individuals seeking relocation or safe-haven assets toward Thailand.
Which property segments are most exposed to the national slowdown?
Lower- and middle-income segments are under the most pressure thanks to mortgage rejection rates above 50–60% and stubborn living-cost increases. Ultra-luxury branded residences, by contrast, are expected to hold up well, supported by high-net-worth demand.
What should Phuket property buyers be watching in 2026?
Keep an eye on potential changes to government support measures, foreign buyer incentives, long-stay visa reforms and infrastructure investment in tourism-dependent regions. Shifts in consumer confidence once a new government is in place will also be telling.
Final Thoughts
A fourth consecutive year of contraction across Thailand’s residential market is a serious signal, but it doesn’t translate directly to Phuket. The island’s reliance on international buyers, lifestyle demand and tourism gives it a different rhythm than Bangkok. For owners and prospective buyers on Phuket, the more useful focus is on lending conditions, foreign buyer sentiment and any policy moves that target tourism-led regions specifically — not the headline national numbers alone.
Related Reading
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