A woman examines resale house listings displayed at a fair in Bangkok. (Photo: Phrakrit Juntawong)

The residential market may have already bottomed out, but a recovery is unlikely to resemble previous cycles, with second-hand homes expected to become the primary growth engine as affordability challenges continue to reshape buyer behaviour.

Vichai Viratkapan, an independent housing and urban development analyst and manager of the Housing Finance Association, said the market has begun to stabilise, but the recovery will be gradual and led by resale housing rather than newly launched projects.

"The market has started to recover, but not every segment will recover at the same pace," he said. "Resale homes will become the key driver of the next growth cycle."

Second-hand homes are better aligned with current market conditions because they offer lower prices, established neighbourhoods and immediate occupancy at a time when purchasing power remains under pressure, said Mr Vichai.

Households are making more practical purchasing decisions as economic uncertainty, elevated household debt and stricter mortgage lending standards continue to limit affordability, he noted.

Affordability has overtaken speculative investment and new project launches as the dominant factor influencing purchasing decisions, prompting buyers to focus on homes that fit their financial capacity, said Mr Vichai.

The structural shift has been building for nearly two decades. Before 2007, second-hand homes accounted for 48% of residential transfers by unit, while new homes represented 52%.

The gap was even wider by transaction value, with resale homes comprising only 38% of the market compared with 62% for newly built housing.

That balance has now reversed. In the first quarter of 2026, second-hand homes represented 67% of residential transfers by unit, leaving new homes with only a 33% share.

The value gap has also narrowed significantly. Existing homes accounted for 48% of total transfer value, while new homes captured 52%, highlighting stronger demand for higher-value resale properties.

Mr Vichai said the figures indicate that the resale market is no longer limited to lower-income buyers, but has become a mainstream option across several price segments.

He attributed the trend partly to changing buyer preferences following the pandemic, with purchasers increasingly favouring completed homes that allow them to inspect actual units, neighbourhoods and facilities before committing.

"Unlike off-plan projects, completed homes eliminate construction risks and allow buyers to secure mortgage approval immediately before transfer, reducing uncertainty throughout the purchasing process," said Mr Vichai.

Mortgage approval remains another major hurdle, although rejection rates have improved markedly, falling to around 45% in the first quarter of 2026 from a peak of about 70% at the end of 2025, as financially weaker borrowers had already exited the market.

He compared the lending process to a water filter, saying stricter underwriting has screened out high-risk applicants, leaving a larger proportion of financially disciplined buyers with genuine housing needs.

"The quality of borrowers is improving. Those who remain in the market generally have stronger financial discipline and clearer purchasing intentions," said Mr Vichai.

Developers should adjust their strategies by aligning new supply with genuine demand instead of relying on expectations of a rapid market rebound, he noted.

Projects targeting owner-occupiers with practical unit sizes, competitive pricing and completed or near-completed homes are expected to outperform more speculative developments over the coming years, said Mr Vichai.

Demographic changes, including slower household formation and an ageing population, are further reshaping residential demand and will require developers to rethink both product design and pricing strategies, he said.

"The market is unlikely to return to the rapid growth seen in previous cycles," Mr Vichai said. "The next phase will be driven by real demand, with second-hand housing playing a far larger role than many expected."