Is it Really a Good Time to Invest in Real Estate?

The years have been kind to the Philippine real estate market. Developments are rising left and

right, with the spending power of the middle class growing. Despite this positive change, many

people are still in doubt whether to invest in real estate. One of them is Jesse Colombo, an

economic analyst, who warns about a protective bubble in the real estate industry.

An economic bubble in the property market looks good on the outset – high-quality

establishments and increasing market values. These, however, can become unsustainable as

time goes by, which stresses the importance for prospective property buyers to make

investments wisely.

The Problem with Mortgage

Mortgage loans are rising to an all-time high with 42% in 2012, partly because of relaxed

lending standards. Local banks have raised the loan values while waiving requirements, such as

proof of income. This is because some buyers, such as overseas Filipino workers, cannot

provide proof of income yet can afford the down payment.

Colombo states that problems will appear if the OFWs, who are major property buyers,

suddenly face a non-renewal on their employment contracts. This can derail the construction,

which will then become a lost investment.

What Property Buyers can Do

There are risks to investing in real estate, but buyers can reduce them if they plan carefully.

One concern is choosing a reliable developer who will ensure the structural integrity of the

properties offered. It should also be built on stable ground and meet all governmental and

environmental requirements.

Another thing buyers should keep in mind is their purchasing

power. There are instances when they become excited at

owning a nice house that they fail to plan how to pay for it.

Avoiding this trend will prevent foreclosures. An intensive

discussion with a broker who will break down the possible

amortizations and figure out workable payment schedules is

in order. This will help prospective owners make an informed

decision before finalizing the purchase.

The loan is also another issue buyers should look into. It's

better to deal with a strict bank that insists on meeting the requirements to ensure stable

transactions. A loan with PAGIBIG is also an important option to take into account, as they

provide fair terms that can lessen financial burdens.

A Thriving Future

If planned right, real estate investments can pay off the original cash out within a few years.

Study the possibilities and prepare against possible adverse events. Doing so will keep finances

and investments stable.

References:

http://www.forbes.com/sites/jessecolombo/2013/11/21/heres-why-the-philippines-

economic-miracle-is-really-a-bubble-in-disguise/

http://nomadcapitalist.com/2013/12/10/philippine-pesos-one-reason-invest-philippines-

real-estate/

http://www.rentinmakati.com