Is It a Good Time to Purchase a House and Lot in the Philippines? | rendezvouscometo
Due to the fact that the epidemic is still active in many regions of the world, the state of the global economy is still fairly negative. In point of fact, the International Monetary Fund (IMF) characterizes the forecast for the month of July as “dark and unclear.” A new government has taken office in the Philippines just in time to capitalize on the country’s unexpectedly strong economic recovery. Despite the fact that the Asian Development Bank increased its growth prediction for the country from 6.0% to 6.2%, it issued a warning of possible contractions due to the dismal world economy and increasing costs of products. This raises an important question for prospective homeowners as well as investors: Is the present a suitable time to purchase a house and lot in the Philippines?
In the Philippines, how much does it cost to purchase both a house and a lot?
You’ll learn in “Real Estate 101” that location is the single most important factor in determining the price of a home. When it comes to purchasing a house and lot in the Philippines, the same rule applies. Homeowners who wish to plant their flag in one of the country’s major urban areas should be prepared for sticker shock, as the typical 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. It should come as no surprise that the cost per square meter will be cheaper the further one travels from the major urban centers. If you look for lots in neighboring provinces, you could be able to get a price reduction of at least fifty percent.
However, buyer beware is appropriate. When you acquire lots from more remote locations, you almost always end up paying more for transportation, and there is a greater possibility that essential services will either be difficult to obtain or nonexistent at the moment. Nevertheless, whatever savings you achieve by doing so are well worth it. If you want to purchase a house and lot for a low price, you’ll probably have to give up certain things that are essential, such as a reliable internet connection, consistent water and electricity supply, or even a well-developed road network.
Take into account the Costs of Construction
Now, if the prices of the lots aren’t enough to frighten you away, the costs of construction might do the trick. The ongoing pandemic has caused significant disruptions to the supply chain around the world. As a direct consequence of this, the costs associated with production and delivery skyrocketed as manufacturers struggled to fulfill their delivery obligations. After that, the crisis between Ukraine and Russia brought up another worldwide headache, which further drove up the price of oil to record heights. These causes led to an increase in demand across the globe for a variety of consumer staples as well as building materials.
According to the local building reference website Martilyo.com, the typical cost of a rough finish is approximately P17,500 per square meter, while the cost of a basic finish is approximately P22,500 per square meter. The average price per square meter will go to P50,000 if you choose finishes that are elegant.
Considerations to Make Regarding Finances
Let’s take a look at the equation from the perspective of the funding first before we address this question. On July 14 of this past year, the Bangko Sentral increased the rate for the overnight repurchase facility from the previous 2.5% to 3.25%. This purchase rate is used to calculate the amount of interest that commercial banks and other financial institutions charge for things such as credit card fees and the interest rates on mortgage loans. When compared to the interest rates that were available when purchasing a property either last year or in the years prior to COVID-19, this results in higher rates for prospective homeowners.
Additionally, buyers can anticipate an increase in the additional fees and taxes associated with purchasing a home. These are the costs that are incurred in addition to the value of the property and might include things like registration and notary fees, the cost of insurance, and property taxes, among other things.
So, should you go out and make a purchase right now?
In light of all of these factors, the decision to purchase a house and lot in the Philippines right now is heavily influenced by your current level of financial stability. Cash purchases will always attract sellers who need the money immediately, and they will also help you avoid hikes in interest rates and other inflated costs. Cash purchases will always attract sellers who need the money immediately.
However, the vast majority of purchasers are not in a position to pay the total amount. For most, securing long-term mortgages and loans will require the assistance of banks and other financial institutions. Simply put, due to the higher interest rates, your total payments will be significantly greater when compared to those of the previous year. Those who own lots should ready themselves for increased construction expenses. You should, then, prepare yourself for a significant increase in the price of the home you’ve had your eye on for the past few years.
Does this imply that prospective buyers should hold off? Once more, it is debatable. The COVID-19 pandemic shows no signs of abating, as new strains of the virus continue to surface. The sooner everyone in the globe acknowledges that they are no longer infected with coronavirus, the sooner things will return to normal. Despite this, some damage has already been done, including an increase in the pricing of a variety of different goods and services.
Once the economy has recovered to the level it was at before the epidemic, interest rates will eventually fall, which is the only silver lining to this cloud. Given the current state of affairs, it seems likely that we will experience a turnaround in the economy in the relatively near future. If you have the financial means to wait for higher rates, then that’s a wonderful thing. You should not, however, anticipate that the house and lot of your dreams would continue to be available in the Philippines. You also shouldn’t expect the price tag that is currently displayed to remain the same. According to information obtained from the Bangko Sentral Residential Real Estate Price Index in March 2022, the average price of a home in the local market increased by 5.6% from March 2015 to March 2022, year on year. The price of a home increased by 4.9% from the first quarter of 2022 to the fourth and final quarter of 2021.
Find Out More Information Regarding Real Estate in the Philippines
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