How work from home changes what people are looking for in real estate
Where you think the real estate market is headed
How COVID-19 impacted the Philippine real estate industry
In 2020, as the effects of COVID-19 made a huge impact on the economy around the world, the Philippine property estate sector may have faced challenges amidst the disruptions. But emerging opportunities indicate new market trends, predominantly influenced by demographics and financial status.
Based from data report in September 2020 by Media and Research of Bangko Sentral ng Pilipinas (BSP), the nationwide residential real property estate prices of various types of new housing units in the Philippines increased by 27.1 percent year-on-year (y-o-y) in the second quarter (Q2) 2020 based on the Residential Real Estate Price Index (RREPI) (Figure 1).
This is the highest y-o-y growth rate recorded since the start of the series in Q1 2016.
“Banks cited the following reasons for the uptick in real estate prices in Q2 2020: a) higher demand for high-end projects, which drove the average price per square meter (sqm) upwards; and b) rising prices of construction materials, labor costs and other indirect costs, e.g., higher marketing costs of appraised premium properties. Further, in terms of area and type of housing unit, the highest contributors to the increase in housing prices were loans for the purchase of condominium units (particularly those in NCR) and single attached/detached houses. Low base effects also contributed to the price growth.” (BSP)
Whilst on the business side, the industrial sector didn’t hamper operation, likewise, the industry became actively engaged in space rental and warehousing demand brought about by its function as online sales and e-commerce accelerated by localized lockdowns and quarantines.
The Philippine Economic Zone Authority (PEZA) has also reported that 90% of its locators are now back on operations.
“We have also seen a rise in lease rates on warehouses, especially in Metro Manila and in Southern Luzon… There is still ample land in the pipeline and construction costs are still stable, it remains a good opportunity for CapEx spent.” (Rara, F. 2020.)
How work from home changes what people are looking for in real estate
In spite of the rising property value, residential developers in the Philippines performed fairly in 2020. A shift in choosing housing options was greatly affected in a positive manner. Working professionals considered investing in house and lot properties compared to condominium units.
“People who never left their condos for the past 6-7 months while in quarantine are re-evaluating their residential property options. We’ve seen an uptake in demand for second properties, vacation homes, beach properties, house and lots in Laguna and Batangas.” (McCullough, M. 2020.)
Those who are considering an upgrade of their property, refinancing or buying another property as your second home, we recommend that you do research well in terms of your long-term land purpose and its market valuation. Forecast your real estate investment by using mortgage and amortization calculator. This kind of tool will predetermined your calculated monthly/yearly amortization. Affordability-wise, it will show the result of your mortgage based on your input figure such as how much of the deposit you made and the remaining balance to pay in the number of terms and interest rate that you enter. It also provides additional calculators which have features for mortgage based on income, refinancing, and overpayment. A similar tool such as this is made available from local property developers.
In the Philippines, the national government mandated the Pag-IBIG Fund (Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industriya at Gobyerno) or Home Development Mutual Fund to address the shelter financing of every Filipino.
The Pag-IBIG fund allows members to get their dream house through its affordable housing loans that includes:
- Purchase of a fully developed residential lot or adjoining residential lots
- Purchase of a residential house and lot, townhouse or condominium unit
- Construction or completion of a residential unit on a residential lot
- Home improvement
- Refinancing of an existing housing loan
Likewise, the agency offers lower interest rates compared to private financing groups.
Where you think the real estate market is headed
This pandemic, the work-from-home working professionals and the emerging start-up entrepreneurs have come to realize the importance of investing in real estate, specifically to own a house and lot — the property value of the estate on a long-term goal.
In 2020, we’ve seen disruption in the real estate market. It may have been worse to other organizations, but the majority of its stakeholders continue to operate as they envision the opportunities in the new normal needs of the country. There will always be buyers ‘ market and sellers’ market; the dynamics of the real estate industry is ever-shifting, after all — even before and after the pandemic, a family will always need a place to work and a place to live.
References:
Cayabyab, J.C. (2020, October). Post-lockdown Market Shift: Sustaining Economic Growth with Warehousing, Coworking, and the Townhouses in the Philippines. KMC. Retrieved March 15, 2021 from https://kmcmaggroup.com/research-insights/2020/post-lockdown-market-shift-sustaining-economic-growth-with-warehousing-coworking-and-townhouses-in-the-philippines/
Citizen’s Charter. (2017 July). Pag-IBIG Fund. Retrieved March 16, 2021 from https://www.pagibigfund.gov.ph/document/pdf/citizencharter/Approved%20Citizen%27s%20Charter%20(Housing%20Loan%20Availment)%20-%20July%202017.pdf
Residential Real Estate Price Rise in Q2 2020. (2020, September 25). Bangko Sentral ng Pilipinas. Retrieved March 15, 2021 from https://www.bsp.gov.ph/SitePages/MediaAndResearch/MediaDisp.aspx?ItemId=5556
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