Making the most out of today’s real estate market
The Philippine real estate market, particularly in Metro Manila, has taken an interesting turn.
If you’ve been browsing property news and condo listings lately, you may have noticed an increasing number of properties being advertised with phrases like “flexible terms,” or “lowest price ever”. That’s because the industry is seeing a shift in market dynamics.
But before you jump in, let’s break down what’s really happening.
Understanding the dynamics
To understand the shift, we need to look at how we got here. The remaining inventory as of Q3 2024 stood at approximately 75,300 units, with an estimated absorption period of at least 5.8 years. Why?
One, actual demand didn’t grow at the same pace as supply, primarily influenced by high inflation, and high interest rate environment over the past couple of years.
Because of realizations during the pandemic, more buyers, especially young professionals, are also seeking horizontal developments (townhouses and house-and-lot units) outside Metro Manila, particularly in Calabarzon and Central Luzon. They saw the importance of space, freedom and nature.
The Bangko Sentral ng Pilipinas (BSP), at that time, also raised key policy rates to curb inflation, making financing options more expensive.
And, given the rise in the cost of living, many potential buyers are taking a “wait-and-see” approach, prioritizing essentials over major investments.
Key advantages
With more supply than demand, buyers now have three key advantages they can leverage to secure the best deal.
Competitive pricing. Developers are offering enticing deals. But let’s be clear: it’s not a fire sale. Prices haven’t plummeted dramatically, but the market is more forgiving. We’re seeing longer payment terms, lower reservation fees, and creative financing options.
This is similar to investing in stocks—when blue chip stocks dip due to temporary market conditions, smart investors accumulate shares because they recognize long term value.
Better negotiation power. With the current inventory levels, buyers can negotiate for better terms. Want a lower down payment? Don’t be ashamed to ask for it. Need an extended payment scheme? There’s a good chance a developer will consider.
More choices, less pressure. Buyers have time to shop around. You can compare multiple developments and pick the one that truly suits your lifestyle, investment goals, or future plans. Think of it like diversifying your portfolio in the stock market—having a range of options helps balance risks and maximize returns.
Golden window
If you’re considering buying property, now is the golden window of opportunity—but only if you make informed decisions. Here’s how:
Choose the right developer. Stick to reputable developers with a proven track record. A great deal from an unknown or struggling developer might not be worth it if the project faces delays or quality issues. Think of this as investing in a solid, well-managed company than a speculative stock with uncertain prospects.
Align with your lifestyle, goals. Are you buying for investment or personal use? If it’s an investment, look for locations with strong rental demand, like those near business districts or transportation hubs. If it’s for personal use, ensure the amenities, community, and location align with your lifestyle. Just like picking stocks, you need to align your choices with your financial goals and risk appetite.
Understand your financing options. With higher interest rates, financing is a crucial factor. Some banks and developers are offering more flexible home loan terms to attract buyers. Compare different financing options, from bank loans to Pag-IBIG housing loans, to find the best fit for your budget. Similar to trading, knowing your margin requirements and leveraging options can make a huge difference in your investment outcome.
The market is evolving, not collapsing
While an oversupply might seem alarming, it’s actually a sign of a maturing market.
In economic terms, competition fosters innovation, better quality developments, and more customer-centric offerings. Developers will refine their projects to match shifting consumer preferences, just as companies innovate to stay relevant in the stock market.
For buyers, this is an opportunity to enter the market under favorable conditions, whether for investment or for end-use at a reasonable price. For developers, successfully navigating this phase will build brand loyalty and set the stage for future growth.
Real estate, like the stock market, rewards those who make informed, strategic decisions. Whether you’re looking for a place to live or an asset to grow your wealth, now might be the right time to make your move.
