Most Real Estate Brokerage Company would agree of the slipshod of Real Estate acquisition during this time of CoVID-19 Global Crisis. One notable Real Estate Brokerage Company in Tarlac almost lost 70% of the sales from previous months of January and February2020. Averaging (100) hundred units per month sold marked the prime of the collective effort of the Realty Group. The common denominator that impinged to real estate business: be prepared for uncertainties of a global pandemic.
While no one could predict what history unfolds to the market world (unless you subscribe to FengShui) COVID-19 has affected all facets of industries including Telecommunication, Transportation, Retail, BPO’s, and at the very least the Basic commodities. This market recession also affected Banks, Real Estate Mortgage Companies and Real Estate Developers in terms of sales production buttressed by the loss of qualified buyers in terms of acquisition capacity. The Real Estate industry is not that prepared (just like everybody is not prepared) on the gravity and impact of the crisis.
A friend of mine (He is a great friend of mine; futuristic by attitude just like few of us) dropped me a message soliciting my advice (if there is any –maybe because its real estate matter) without any doubt that I may offer prudent decision on his constraint. He’s perplexed whether or not it is not an urgent need to buy Real Estate during this crisis having the assumption of the value depreciation of properties after pandemic subsides. His conclusion seems to follow a logical argument base on the natural tendency of the principle of supply and demand during and after a recession period. However, let us find out if it would be applied to buying a house and lot properties.
Banko Sentral ng Pilipinas released the average growth rate per quarter of house and lot properties last December of 2019 to 3.5% without including the skyrocketed growth of the last quarter that reach as high as 10.4%. Real Estate properties soar high to 16% value appreciation per annum. Global record shows that Real estate does not depreciate whatever crisis and pandemic come.
It is noteworthy that economic recession is not congruent to housing crisis and backlogs. The Developers in the Philippines have almost hundred thousand inventory of house and lot properties waiting for sellers to out in property listing. There is a lot of inventories; on the other side there is a peak of need for human shelter as the population rapidly grows aside from the plan to decongest Manila which will create another story of Urbanization of some provinces. A recession doesn’t change these circumstances for people. Even in full-blown recessions, the housing market is incredibly durable.
Forbes predicted Five (5) positive impacts on Real Estate after this Pandemic subsides and these impacts will wallop a big blow force to investors to grab the opportunity of buying Real Estate NOW. Not my intention to enumerate those impacts but it will lead to one BIG IMPACT; Real Estate development is aggressive after this Pandemic and it will continue to be aggressive unless population is controlled according to analyst yet debatable for some business gurus.
Now, investors have to be aggressive also this time. If there is a right time to invest , it is during this crisis! Here are some facts and government plans to boost your confidence:
a) Gross Rental income is still high and buying property for generating rental income is as good as investing in Jollibee Corp in the stock market in time of economic rise. Gross rental yields in Manila still remain good at 7.01% as it is with the other urban cities. Take advantage of the Rental yields from the RFO (Ready for Occupancy) units.
b) Rental Fee is also high. If you are still renting expect that your salary will be cut by almost 35% only to be allotted to rental fee. Although the Government issued a moratorium on rental collections it will nonetheless lessen the burden after this crisis. A little sacrifice and proper money budgeting will end your rent-nightmare.
c) During this time mortgage interest rate has been slashed by some of the Major Mortgage banks offering as low as 5%-6% interest rate per annum for economic and high-end subdivisions. Pagibig Fund (HDMF) also offers the lowest rate in their data at 3% per annum for minimum wage earner and 5.375% for above minimum earners and self-employed professionals.
d) After this crisis when construction development is at its peak; construction supply is at its demand causing to an increase in price. That means an increase also in value of the property. So this time since the value of the property is stable to its current price, this might help you decide to buy.
Investors may not be certain of the future risk of crisis but in the long run, surely it will do more advantage than disadvantage. Find the best home offer; have a stable job; get financing at historically low rates, buying a home might be a wise choice and the right thing to do — even now.
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