Current real estate prices, for example, are 35% to 40% lower than they were before the Asian financial crisis in 1997. Prices in the central business district of Ortigas have dropped to P40,000 per square meter from P60,000 to P65,000/ sqm. while Makati prices have gone down to about P60,000/sqm from P95,000 to P100,000/sqm.
Much of the price drop can be traced to the oversupply of office units in the CBDs. To date, there is an estimated 20% vacancy rate or units that are not purchased or rented. That rate is expected to go down to 5%, the signal for developers to start building new units, four years from now if the economy sustains its targeted 3% to 4% growth a year.
There is a 3-million housing backlog in the low-income market segment which government is trying to address.
The middle-income market is more elastic. If the economy improves, demand goes up; if the economy is static, demand contracts. Because there is no excessive oversupply in this market, however, there has been a sprouting of projects from Quezon City and Antipolo all the way down to Cavite and Laguna. Developers also have some leeway in modestly raising their prices.
One, shop around. There are lots of choices that would fit your lifestyle and budget. Because of the oversupply, developers offer various financial options. A middle-market house costs from about P3 million to P6 million, depending on the location and type of housing.
Two, check the prevailing rental rates in the area. If the rental rates are not too way off from the monthly amortization, then it is time to buy.
Three, don’t take more than a year to decide. The market may suddenly swing up, followed by higher selling prices.
Four, check out the developer. Buyers should be wary of developers who give offers that are too good to be true. Some buyers have unwittingly bought properties on a pre-selling basis and were left only with promises to finish the project.