April 15, 2024

buying a house and lot in the Philippines, is this a good time to do so?

7 min read
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Photo by Paul Szewczyk on Unsplash

LGIORDANI | Teodoro Jaen Jr, Correspondent | When it comes to buying a house and lot in the Philippines, is this a good time to do so?

Because the pandemic is not yet under control in many parts of the world, the current status of the economy of the entire planet is still considered to be in a rather poor shape. According to the International Monetary Fund (IMF), the outlook for the month of July is “black and murky.” This is a reality. In the Philippines, a new administration has just taken office, and just in time to capitalize on the surprisingly robust economic rebound that the country is experiencing. In spite of the fact that the Asian Development Bank raised its growth projection for the nation from 6.0 percent to 6.2 percent, it issued a warning of probable contractions owing to the dismal economy in the globe as well as the rising costs of products. This presents a significant issue for potential homeowners as well as investors: Is the current time a suitable time to acquire a house and lot in the Philippines?

In the Philippines, how much would it set you back to buy a house along with the land it sits on?

Location is the single most essential component that goes into establishing the price of a house, as you will discover in the course titled “Real Estate 101.” The same law is applicable in the Philippines when it comes to the purchase of a home and land together. The average price of a 50 to 70 square meter lot in Metro Manila can cost between three and five million pesos, which is equivalent to P66,667 per square meter. Homeowners who wish to plant their flag in one of the country’s major urban areas should be prepared for sticker shock, as the average price of such a lot can cost between three and five million pesos. As one moves further away from the big metropolitan areas, one may expect the cost per square meter to drop, which is not something that should come as a surprise. If you check for lots in nearby provinces, you could be able to receive a price reduction of at least fifty percent if you’re successful in your search.

However, a warning to buyers to exercise caution is warranted. When you buy lots from more outlying areas, you almost always wind up spending more money on transportation, and there is a greater possibility that essential services will either be difficult to obtain or nonexistent at the moment. This is because more remote areas have fewer people and therefore fewer businesses. In spite of this, whatever financial gains you get as a result of your actions are more than justified. If you want to buy a house and lot for a low price, you will probably have to give up some things that are essential in order to do so, such as a dependable internet connection, consistent water and electricity supply, or even a well-developed road network. If you want to buy a house and lot together, you can also buy just the lot separately.

It is important to consider the costs associated with building.

Now, if the pricing of the lots themselves aren’t enough to dissuade you from purchasing one, the costs of building could be enough to do the trick. The current epidemic has significantly hampered operations all along the supply chain in every region of the planet. As a direct result of this, the expenses that were involved with manufacturing and delivery increased, and manufacturers had a difficult time meeting their delivery responsibilities. After then, the conflict between Ukraine and Russia brought up another international problem, which further pushed up the price of oil to record highs. Consequently, the price of oil rose to a new all-time high. As a result of these factors, there was a rise in demand all over the world for a wide array of consumer goods and building materials.

According to the local construction reference website Martilyo.com, the normal cost of a rough finish is roughly P17,500 per square meter, while the cost of a basic finish is approximately P22,500 per square meter. [Citation needed] If you pick sophisticated finishes, the average price per square meter would increase up to P50,000. This is because the price is determined by the square footage.

Matters of Financial Importance to Take into Account

Before we address this topic, let’s begin by examining the equation from the viewpoint of the financing first. The rate for the overnight repurchase facility was increased by the Bangko Sentral on July 14 of this past year, from the prior level of 2.5% to the current level of 3.25%. The amount of interest that commercial banks and other financial institutions charge for items like credit card fees and the interest rates on mortgage loans is determined by using this purchase rate as the basis for the calculation. This results in higher interest rates for potential homeowners when compared to the loan rates that were available when acquiring a property either the previous year or in the years previously to the implementation of COVID-19.

In addition, prospective purchasers should prepare themselves for an increase in the many additional fees and taxes that are linked with the purchase of a property. These are the expenditures that are expended in addition to the value of the property, and they may include things like registration and notary fees, the cost of insurance, and the cost of property taxes, amongst other things.

Should you thus go out there and make a buy right this second?

In light of all that has been mentioned, the choice of whether or not to buy a house and lot in the Philippines right now is one that is significantly impacted by the amount of financial security that one now possesses. Cash purchases will always attract sellers who need the money quickly, and they will also help you avoid spikes in interest rates and other inflated charges. Cash purchases will always attract sellers who need the money immediately. Cash transactions will always attract vendors that are in desperate need of the money right away.

Having said that, the overwhelming majority of customers are not in a position to pay the complete sum at this time. The majority of borrowers will need the support of banks and other financial institutions in order to be eligible for long-term mortgages and loans. To put it another way, because of the increased interest rates, the total amount that you will be required to pay will be noticeably larger when compared to what you were had to pay the year before. Those who own lots should get themselves prepared for higher construction costs. Therefore, you ought to get ready for a big increase in the cost of the house that you’ve had your eye on for the previous several years and consider purchasing it sooner rather than later.

Does this suggest that potential purchasers should put their plans on hold? Once more, it is arguable. As new COVID-19 virus strains continue to emerge, it does not appear that the current COVID-19 pandemic will end any time soon. As soon as people throughout the world realize that they are no longer infected with coronavirus, things will begin to return to normal much more quickly. In spite of this, there has already been considerable harm done, including a rise in the prices of a wide range of various products and services.

The one ray of sunshine in an otherwise gloomy situation is that interest rates will ultimately go down after the economy has fully recovered to the level it was at before the outbreak. Given the present state of affairs, it is probable that there will be a reversal in the economy in the very near future. This is something that we should be looking forward to. It is to your advantage to hold off on making a purchase until rates are higher if you have the financial resources to do so. However, you should not assume that the home and lot of your dreams will continue to be available for purchase in the Philippines because this is not likely to be the case. It is also unreasonable for you to anticipate that the price tag that is now shown will remain unchanged. The information on the average price of a house in the local market that was gathered from the Bangko Sentral Residential Real Estate Price Index in March 2022 indicates that the price of a home in the local market grew by 5.6% year on year from March 2015 to March 2022. When compared to the first quarter of 2022, the price of a property had a 4.9% increase when measured against the fourth and final quarter of 2021.

Find Out More Information Regarding Real Estate in the Philippines

Come visit us at Ohmyhome Philippines for the latest news, trends, available properties, and prices in the country today. You can also get a pulse of the local real estate market by subscribing to our Facebook, Instagram, or YouTube accounts. Alternatively, download the Ohmyhome mobile app for iOS and Android. Ohmyhome is a simple property technology solution to help both buyers and sellers make the best real estate decisions through honest and accurate information. The digital platform, now with 100+ partner developers, over 600k downloads and a 4.8++ rating, aims to provide the best property commerce experience for people from all walks of life in Singapore, Malaysia, and the Philippines.

Photo by Paul Szewczyk on Unsplash