Will 2021 finally be a good time to buy property in the Philippines?

Low interest rates, favourable property prices... Can we finally move on to bigger things after all that panic buying of toilet paper?

Lockdowns, an economic recession, panic buying of masks and sanitizers from grocery stores… Amidst all of the uncertainties that COVID-19 has thrown at us in the past year, some of us planning to buy a house might have found it hard to get a foot in the door (Get it?).

Now that things seem to be getting better in 2021, is it finally a good time to consider buying a property in the Philippines, whether it’s a condo or house and lot?

We look at some of the reasons why industry experts think it’s a good time to buy, and pick them apart:

1. It’s a good time to take advantage of low-interest rates
2. Property prices are falling because of the recession
3. Property is a stable investment that appreciates over time

1. It’s a good time to take advantage of low-interest rates.

If you’ve been listening out for home-buying tips, you’ll probably know that bank interest rates have dipped to an all-time low, even dropping below 7% in 2021. In comparison, past reports say that interest rates were almost 10% in 2019 where inflation was at its peak.

And if you’re going to take up a loan of hundreds of thousands of pesos to buy a property, even the slightest difference in interest rates makes a huge difference. Huuuge! Here are some quick maths: If you take a PHP500,000 loan over a period of 10 years, the difference between a 7% and 10% interest rate is PHP96,253.54. That’s almost a fifth of your loan amount!

Sounds like an amazing thing to take advantage of, right? Um, yes and no – and here’s the catch. If interest rates are at an all-time low, it also means one thing: The only way it can go is up. Even with fixed-rate bank loans, after the fixed-rate period of 3-5 years, the interest rate becomes variable and might increase, especially when the economy picks up.

There’s no doubt that it’ll be much easier to pay off your home loan in the short term due to the lower interest rates, but be sure not to over-leverage yourself, and factor in some funds as a buffer when doing your financial planning.

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2. Property prices are falling because of the recession.

Economic downturns leave few industries unscathed, and the property sector has inevitably been affected too. Silver lining?  This makes it more feasible to become a homeowner in the Philippines now if you’ve been planning to do so for a while. As some property prices have dropped up to 15% due to COVID-19’s impact, it’s a great opportunity for you to save more on your big-ticket purchase!

There are more benefits in buying a property during this time such as gaining an asset rather than seeing it as a liability. 

Let’s think a little more long-term – if it becomes more of a seller’s market in the future (that is, when demand exceeds supply), this puts existing homeowners in an advantageous position as they could potentially sell their homes for a greater profit.

As for whether it’ll become a seller’s market? Quite possibly. In the Philippines’ construction industry, given that it could take a long time to resolve construction delays of condominiums because of the pandemic, it’s very possible that many potential buyers would turn to resale condo units in the near future. If you need help, there’s a wide variety of properties in every price range that you can browse on Carousell.

3. Property is a stable investment that appreciates over time

While it’s mostly true, this doesn’t mean you should rush to invest all of your savings into a property all in the name of stability. The reason is that property is an illiquid asset, which means it can’t be easily accessed or spent as compared to, say, cash in your bank account.

Especially in a pandemic-hit time like this, it’s good practice to hold some liquid assets in the form of cash or other assets that can easily be converted into cash. This way, in the case of an emergency or whenever required, you’ve got finances readily available to relieve the pressure.

Of course, if you’re financially ready to comfortably afford a house, do plenty of research and have fun home-shopping!

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