You can easily get caught up in the positive hype of house and condo sales reps that line the shopping malls and internet. But the fact is the housing market will not keep rising as people say.
Who is the biggest owner of properties in the Philippines? OFW’s, that is a population of people reliant on work abroad and in the current economic climate that is seeing the West shrink all its markets and government services the OFW market is already feeling the pressure.
You see it’s all based on speculation the OFW market is based on a higher demand for nursing care abroad and workers in places like China but fact of the matter is nursing care is going to have a steep drop in service levels as economies simply can’t cope with the pressure of lack of funding. Westerners are living older but it doesn’t mean the facilities to take care of them can sustain the level of care currently needed.
What does that mean? I have seen it already in the UK where the pressure is put back onto families to look after older members in the same way that the Philippines finds its elderly living amongst their families. Financial cuts are never popular but eventually tough decisions will be made as well as finding more people going into nursing from western nations because it starts to become more financially viable as the standard of living drops and the opportunities for work reduce. All of this will eventually see the OFW market start to reduce as simply it’s not cost affective to have labour that “exports money” from an economy. This doesn’t even scratch the surface in relation to nationalism which seems to be surfacing in many countries as well.
Now the thing is OFWs generally haven’t bought retirement homes they have bought investment properties with a low percentage down. This means the buildings are a burden of debt still to be paid. Developers keep developing and the span of debt to liquid funds opens as simply there is more “speculated” funds than there is real money. Sound familiar? Its how the West seen its entire economies nearly get swallowed up with the banking sector.
The issue I see in the Philippines all over the place is empty properties, they are mortgaged and going to be paid off in between 10 to 25 years but the fact is there are no tenants that often the “buyer” was sold when they took the property on with such things as a guaranteed growth rate of 10% on property value as well as being able to rent out straight away.
Ghost towns have developed as well as empty condo developments, they are too expensive for most locals to rent or purchase and the low-class sub-divisions are more like concrete shanty towns than housing developments, There is a bubble building to burst.
But its cheaper in the Philippines to buy and build a home! Really? Have you seen the construction quality? Have you seen developers suing people to stop them talking out loud about the poor construction of buildings. Ok you can spend P2million on a house and value it at P3.5m or P4m but its only worth that if you can sell it. Fact is moving a house for sale is a lot harder than it seems. Construction is ongoing all over the place which also means when they keep upping the price of property on mythical evaluations the only way to offload it is to get someone buying into the dream.
Don’t get me wrong as there is one important factor that makes a difference “we all need a home”. A roof over our head is very different to owning 20 empty condo’s that we struggle to pay every month and still hoping we can offload someday.
If buying a property in the Philippines I can only advise on caution and reading up on building codes and regulations as well as buying for living not for selling.