BANGKOK, THAILAND – The war shock in the Middle East pushed up oil prices, weakened the baht and tightened credit, making property purchases in Thailand in 2026 significantly more difficult.
Oil price shock hits daily life and construction costs
The military escalation involving the United States, Israel and Iran, and the temporary closure of the Strait of Hormuz, drove oil prices above 100 US dollars per barrel.
Because more than 20% of global oil and LNG transport passed through this route, higher energy costs fed into transport, food and production worldwide. This also raised construction and living costs in Thailand, putting additional pressure on buyers and developers.
Energy dependence slows economic momentum
Thailand was heavily dependent on imported energy, which analysts said accounted for around 5% of GDP, causing oil market price movements to filter rapidly into the economy.
The government stated that reserves were sufficient for about 90 to 100 days, yet individual petrol stations already experienced disruptions, while economic growth in 2026 was expected to slow to only 1.0 to 1.4%.
Diesel subsidies and inflation risks
Additional pressure came from the Fuel Fund, which was reported to be around 12 billion baht in deficit.
Analysts considered the diesel price cap of 30 baht per litre sustainable for only 40 to 68 more days, and a reduction in subsidies would have accelerated inflation and further weakened purchasing power.
Lower interest rates offer only limited relief
The Bank of Thailand cut its policy rate to 1.00% to ease conditions for businesses and households, while rates in the United States remained much higher at around 3.50 to 3.75%.
This interest rate gap encouraged capital outflows, pushed the baht down towards 34 to 36 per US dollar and made imports such as building materials more expensive, prompting banks to act more cautiously on new financing.
Market split: weak at the bottom, steadier at the top
High household debt of more than 90% of GDP led banks to tighten criteria and reject mortgages more often.
Rejection rates reportedly stood at 40 to 70%, particularly for units priced between 1 and 2 million baht, while even high earners with irregular income were subject to stricter scrutiny.
Diverging material prices complicate projects
On construction sites, the new uncertainty appeared in mixed price movements that made cost calculations more difficult.
Cement became about 6.0% more expensive, electrical equipment rose by 2.3% and concrete products by 0.9%, while steel fell by around 2.5%, partly due to additional supply from China, South Korea and Japan.
State cuts fees, but only within limits
To support the market, the government reduced the transfer fee to 0.01% for properties worth up to 7 million baht.
The registration fee for mortgages also dropped to 0.01% for loans up to 3 million baht, while developers slowed the launch of new projects and instead focused on selling existing stock.
Condo strategy 2026: caution in the budget segment
Analysts advised particular caution with low-cost suburban condos below 3 million baht, where oversupply and credit refusals were most prevalent.
The low-rise segment also weakened, as sales of single detached houses recently fell by 28% and townhouses by 31%, with long commuting distances and higher transport costs pushing buyers back towards more central locations.
Central Bangkok condos remain comparatively robust
In areas such as Sukhumvit, Silom and Sathorn, limited land supply supported the market, and prices there rose by around 3.4%, according to observers.
Demand came from both domestic and foreign buyers, including investors from China, while the rental market benefited from a trend in which more than 66% of younger people preferred renting to buying, particularly near BTS and MRT lines.
Phuket and Koh Samui: luxury villas as investment assets
In the resort markets of Phuket and Koh Samui, luxury villas were increasingly viewed as investments rather than purely holiday homes.
Buyers from Russia, Europe and China drove this demand, and expected annual rental yields for high-end villas were estimated at 5 to 8%.
Industrial property benefits from production shift
Industrial real estate counted among the most stable segments, as trade conflicts between the United States and China encouraged companies to relocate to Southeast Asia.
The Eastern Economic Corridor with Chonburi, Rayong and Chachoengsao attracted projects in areas such as data centres and e-mobility, and vacancy rates for industrial land in some areas fell to below 5%.
Market reality in 2026
The market in 2026 showed clearly that not every cheap unit was a bargain when loans failed, operating costs rose and locations no longer matched the realities of daily travel.
Potential buyers and investors faced a landscape in which central condos and resort villas appeared more resilient, while many budget offerings struggled to deliver on their promise.