Forecasts indicate that the housing market in the Middle East will face ongoing contraction for the fourth consecutive year in 2026, due to high household debts and rising living costs. According to the Economic Information Center at Siam Commercial Bank, housing transfers are expected to decline by 5% compared to the previous year, reflecting a state of economic uncertainty.
If the conflict persists for an extended period, this contraction could deepen to 10-15%, reflecting weakened purchasing power and increased pressures on families. Surachit Kongship, head of research at Cushman & Wakefield, noted that mortgage application rejection rates have exceeded 50-60%, complicating the situation further.
Details of the Current Situation
Despite government measures such as incentives for homes valued under 7 million baht and easing loan-to-value ratios, these initiatives have yet to lead to a tangible recovery in demand. Demand has decreased across all segments, with middle and lower-class buyers struggling with expenses that exceed their income, while upper-class buyers are postponing purchasing decisions due to economic uncertainty.
Ongoing conflicts in the Middle East are expected to affect market sentiment, increasing living costs and deterring both local and foreign buyers. Although stimulus measures such as reduced transfer fees remain in place, their impact has been limited.
Background & Context
Historically, housing markets in the Middle East have experienced significant fluctuations due to political and economic conflicts. The ongoing dispute among major powers in the region, such as the United States, Israel, and Iran, has exacerbated the economic situation, leading to a decline in property demand. In recent years, there have been attempts to stimulate the market by easing lending restrictions, but current conditions reflect substantial challenges.
Housing markets in countries like Thailand have also felt the effects of regional conflicts, with decreased demand from foreign buyers impacting prices and sales. These dynamics illustrate how regional crises can affect local markets.
Impact & Consequences
Forecasts suggest that real estate sales in the Greater Bangkok area will decline in 2026 across all segments, including mass and luxury housing, as economic uncertainty influences purchasing decisions. For detached and semi-detached homes, demand from middle-class buyers is expected to weaken, increasing pressures on developers.
At the same time, luxury apartments may continue to attract wealthy buyers, but demand from Chinese buyers may persist in declining, weighing down the market. The conflict in the Middle East could lead to reduced foreign investment activity, but it may also create opportunities for wealthy investors seeking safe havens.
Regional Significance
The decline in the housing market has significant implications for the local economy and reflects a state of instability in the region. The ongoing conflicts not only affect housing demand but also influence broader economic conditions, making recovery challenging.
As the situation evolves, stakeholders in the housing market must navigate these complexities while seeking strategies to adapt to changing conditions and mitigate risks.