Real Estate Investment in Q1 for 2023 [Ultimate Guide]

real estate investments

As 2023 begins, the new year offers an opportunity for a fresh start. You are a real estate investment planning to buy or sell a home this year, it's crucial to stay up-to-date about the constantly changing real estate investments and housing market trends. To assist you staying ahead of the game. We compile round-up list from expert websites, articles and financial blogs to gain a better understanding of what to expect in real estate investments during the first quarter of 2023. Below is a brief summary of what to anticipate in the real estate market and trends for the upcoming quarter 1 in 2023.

Let's beginning from order of most important real estate investments trends in the market for Q1 in 2023.

High Interest Rates

First quarter of 2023 may not look like past ones, as high interest rates put a damper on traditional activity. The National Association of Realtors estimates that 19 percent of home sales activity will take place in the first three months of 2023, but with mortgages still out of reach for many, activity could be slower than usual. Real estate lawyers believes buyers will have more leverage in the first few months due to sellers sitting on a lot of equity.

While real estate investors will need to keep an eye out for the odds that the Federal Reserve's interest rate decisions meeting on January 31 and February 1 2023 to increase interest rates by 25 basic points. The need for debt consolidation could play a role in market activity.

Mortgage rates are likely to stay high for the first few months of 2023. This means that the interest you pay on your mortgage will be more expensive. Experts from, predict that the average 30-year fixed mortgage rate will be around 6.2% in the first quarter of the year. This is higher than the average rate of 3.11% from a year ago. Even though the rates are high, there is still a chance that they might be lower than 6%. It is important to keep an eye on the market trends and make an informed decision.

house price sales pending
Decrease in property listings and house price guide

High interest rates make it harder for people to afford a home and result in decrease of demand on home sales. According to experts, if this trend continues, sellers may be forced to lower prices in order to sell their homes. However it's important to note that the decrease in prices may not be substantial and home prices in the first quarter of 2023 are expected to be higher than the previous year by 2%.

The trend can pose a challenge for first-time buyers who are looking to enter the market. With interest rates at 6.2% in the first quarter of the year. The monthly mortgage payments are 50% higher than they were a year ago. Combined with higher home prices, may make it difficult for first-time buyers to afford a home.

Another issue that the market is facing is a shortage of housing inventory. The National Association of Realtors (NAR) reports that there is currently a 3.3-month supply of homes for sale, which is better than last year but still below the five to six months usually required for a balanced market. Lack of inventory can result in a lack of new homes being built and a lack of existing homeowners wanting to sell their homes. This is because with mortgage rates north of 6%, many homeowners are choosing to stay put rather than listing their homes for sale.

The supply and demand of housing inventory is likely to continue to be a problem in the first quarter of the year. With fewer new homes being built and fewer existing homes being listed with less inventory.

Despite these challenges, sellers still hold an advantage with equity built up in their homes and may not be as motivated to sell at current prices and rates. However, buyers may have more leverage in the first few months of 2023, though it is important to keep an eye on the market trends and make an informed decision.

According to Emerging Trends in Real Estate, a joint undertaking between PwC and the Urban Land Institute (ULI), Southeast Asian emerging markets such as Indonesia, the Philippines, and Vietnam are expected to migrate upwards in terms of real estate investment and development trends. Transaction volumes across the region are expected to be lower compared to 2022, with Singapore being the sole major market to buck the downward trend. Inflation is expected to increase development risk, resulting in higher construction costs and labour shortages.

It is expected that office assets will remain the most attractive asset class, while logistics, specialist asset classes such as data centers and “bed space” such as multifamily, hotels, senior living, and student housing are expected to remain in high demand. Overall, investors are expected to focus on more defensive property types, such as those with shorter lease terms that can be revised upwards more easily and with reliable recurrent income.

Thailand Real Estate Market 2023 Outlook

In 2023, new housing launches in Thailand and its environs may decrease to 89-96 thousand units or by 6.3% compared to previous year. Thailand's Real Estate Market is expected to grow at a CAGR of 5% by 2027 and the residential sector may be a major contributor to the market growth. Average price of single-detached houses for sale in Thailand rose by 1.2% during the year to May 2022 and prices are forecast to remain constant in 2023. Companies can own land and foreigners can invest a minimum of US$1 million in a Board of Investment-approved project. Real estate sector contribute 8% of Thailand's GDP in 20212.

Interest rate in Thailand for real estate investments is currently 1.25%. The rate set by the Bank of Thailand's Monetary Policy Committee. Total round-trip costs are moderate at around 9.90% to 11.90% of the property value, inclusive of the realtor's commission of from 3% to 5%. To qualify for residential-land ownership, people must invest at least 40 million baht ($1.04 million) for a minimum of three years, an amount equal to around 8.9% to 10.9% of the total investment.

Strategies and Tricks on Real Estate Investments

infographic for real estate investments information: SET photo source
infographic for real estate investments information: SET photo source

Seller Strategies

If you're thinking about selling your home, it's important to price it correctly to attract buyers and avoid sitting on the market for too long. According to Fannie Mae's most recent Home Purchase Sentiment Index, most consumers still believe that it's a good time to sell despite economic uncertainty. However it's important to note that the average time a home spends on the market may increase by 50% in the first quarter of the year due to the time of year and lower demand.

Sellers should also be realistic about pricing and consider whether they will be able to afford the new interest rate if they need to take out a loan to purchase another home. It may make more sense to wait until interest rates decrease before selling.

Buyers Strategies

On the buying side, it's important to consider the pros and cons of waiting to purchase a home or buying now to avoid paying more later. If you find a home you like and can afford, it may be wise to purchase it despite the high interest rates. Remember that interest rates are constantly changing, but the purchase price is fixed.

If you're a well-qualified buyer, you should be able to navigate the current market. Banks are still lending and appraisals have not been an issue. Smart buyers are using this time to negotiate a better deal and plan to refinance when interest rates decline in the next few years.

Tips for real estate investment in Thailand include researching about the current market, seeking professional advice, understanding the taxes and regulations, understanding the financing options, and diversifying investments.

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