Best Posts in Thread: Land / house prices

My take on the property market in the Dumaguete area:
1. First of all, this country lacks proper zoning regulations and/or the enforcement of such regulations. This means anyone who owns a bit of land anywhere can build a house there.
As a result, many (former) farmers in the area think their farm land is worth a load of money; they just need to subdivide and find buyers and they'll end up rich (which is probably why so much good farm land is laying idle). There's no LGU or state agency stopping anyone with a plan to build a house on farmland. Given that the population density in this country is about the same as in my country of origin, that seems like a strange way to go about building restrictions, especially since quite a bit of land here is mountainous and unsuited for farming.
Of course some buyers and sellers don't understand how the market works, which means you'll find sellers asking 2.5k or more per sqm out in the middle of nowhere. Likewise you'll see buyers who don't get that while the going price for a lot say 5 km inland from Bacong may be around 1.2k per sqm, you'll pay a fair bit more if you search within 2 km from downtown Dumaguete.
2. Yes the number of foreigners in the area (I read somewhere it's around 7,000) obviously has an impact on the local economy -money we spend means income for someone else-, and we also influence the real estate market somewhat. However, the impact on the real estate market is not very big I think; many foreigners either can't afford to buy or don't want to because the land will not be in their name.
In the rental market the impact is a bit bigger I think, and that has indirect effect on the real estate market obviously.
3. Don't underestimate the number of well-to-do Filipino's, whether it's well educated Filipino's living abroad looking to buy or build a nice retirement home or local business owners. Yes many people are still poor, but not all.
4. When trying to get a feel for price levels in the market or even for a single house (is it cheap or expensive) it is generally helpful to consider what monthly rent that property might realistically fetch.
If (in the Philippines) that rent represents an 8% return per year or better on the buying price, I would consider it cheap. If below 6% it's expensive.
So, for example, buying a house for 4.5M (including transfer costs) that you could rent out for maybe 15k a month (4% return) is -economically- a bad idea, whether or not you intend to live there yourself.
5. As for the current state of the market in the Dumaguete area, it will not look the same to everyone, if you're used to land/house prices in urban Europe or America then at first glance Dumaguete is still dirt cheap.
If looking from the perspective of a person from rural Canada or USA then Dumaguete must seem awfully expensive.
I would encourage everyone to forget about such comparisons.
That being said, prices have been rising pretty fast for the past few years in Dumaguete. Whether there's going to be anything like a serious price correction on the horizon remains to be seen, I am not convinced.
On the other hand, some asking prices are indeed way above what one would reasonably expect to pay. In some cases a buyer might be able to negotiate a much fairer price, in other cases the seller might not be really interested to sell.

 

From what I’ve heard while I was scouting for properties to buy last year, Ajong Sibulan is a real estate nightmare. The location is awesome if you are in the market for a fantastic view. The higher you get, the view of Cebu island gets even better. Now the problem. Ajong is a major quarry site and has been for years that landslides have become a major issue. A bit of rain, and you find yourself unable to pass the only access road you’ve got because of rockfalls etc. A fault line was also discovered in the Ajong river that put forth questions on the stability of the surrounding areas. Not a lot of people know this except for the Ajong locals, government officials and geologists who did the study, but all this impacted on the land value of Ajong. A major real estate developer paid a lot of money to purchase huge tracts of land in Upper Ajong (unreal, fantastic views!) with the idea to build a residential development that catered primarily to expats. Of course, the developer bought the land before the fault line was discovered. Now I heard, they’ve been having a hard time selling each parcel of land. Each parcel of land comes with a brand new house and is being sold for about Php 8 million each. They have lowered the price to 7.4m now. The ones who bought were the ones who clearly had zero idea what the value of Ajong costs these days. The land is dirt cheap especially in Upper Ajong. I know a lot of people who have been trying for years to sell their property there with no luck. Some have just kept it after trying for years, waiting it out and just hoping the land will go back up. The more ruthless realtors won’t tell you the truth about Ajong, it’s all about the commission after all. The more honest ones will tell you and give you other options than Ajong.

I am telling you this because I was one of those tempted. The views were just insanely gorgeous.

 

When I came here in 1981 beach property's in Mangnao and Calindagan were around 15 peso's square meter. Land between the beach and the hiway was around 5 peso's square meter. That plot of land where City Mall now is was for sale at 100,000 and I refused it because it was too expensive. I only wish I knew where it was all going to go 35 years ago..

 

I agree with what you say but in my experience most of the sellers don't negotiate too much, it's as if they don't care if they sell or not, in fact I can see properties that have been still for sale for many years.
A big problem also is trying to get to the seller direct, all the so called agents / brokers swarm around like flies on a turd, the last place we went to see ended up with 6 of them hanging around.
One of the few times we were dealing with a direct seller was a woman who wanted 6m for her property, it was out of our price range and she would not negotiate so we declined and left, the very next day a broker tried to show us the same place for 7m, apparently this was him adding on a bit for himself.

 

And the huge price increase in the last four years. Four years ago you could get for 4 mio PHP a 100 sqm condo. Now you get only 25 to 40 sqm for the same price.

 

I was talking to a fellow about the Marina development. He said his aunt bought a unit, one of the first. When measured, it was 1 to 1.5 feet shorter both ways than advertised. I suggested that the sellers measured from the outside. Or perhaps a mistake converting from metric! So a warning--when paying per sq. meter, do your own measurement.