Best Posts in Thread: Real estate prices rising strongly

My problem is I am stuck on what prices should be vs what prices are.

1)the most I have ever paid for acreage was $25k/acre (p309/sqm). The land was all road frontage, Storm Sewer, Sanitary Sewer, Electric, Cable all existing. All I had to do was subdivide, clear, and build houses.

2)the most I ever paid for a lot was $45k (p1,120/sqm), minimum house size in the subdivision was 2,500sqft (232sqm)

3)median family income in US $55k/yr (p2,750,000) US Household Income | Department of Numbers , median Philippine income p267,000 Average Family Income in 2015 is Estimated at 22 Thousand Pesos Monthly (Results from the 2015 Family Income and Expenditure Survey) | Philippine Statistics Authority

4)land in the Philippines is not the same as land in the US. Near a similar sized 100,000 population city, the US has better electric, water, sewer, roads, fire, police, schools, restaurants, grocery stores, hardware stores, malls... The Philippines has better Filipinas. US land should cost significantly more than Philippine land.

5)Philippine income is approximately 1/10th the US. Keeping the same ratio of income to property costs, land in the Philippines should be 1/10th the price in the US.

6)land prices should be closer to p30/meter for raw land and p112/meter for developed land. Those prices actually are real prices today in the Philippines, just not here.

The local market is wayyyy overpriced (for me, based on my experience as a developer), not saying there is a bubble fixing to burst as it seems people continue to think they are getting a deal and paying inflated prices, or see the market continuing to rise so buy out of fear before it is even more expensive, keeping the market up - supply and demand.

The risks associated with purchasing in the Philippines, lack of zoning restrictions, difficulty in being a seller, less than stellar utilities, uncertainty if we will go to the US to get my wife citizenship, and the price of real estate here, all combine to keep me out of the market. I am a renter not a buyer. I often reiterate my opinion about prices here and need to remember everyone has their own circumstances and requirements. I am not 'the market', just one pea in the pod.

 

SELLING or SOLD? They are not the same thing and many comments here tell of sellers trying their luck. The problem is that buyers may look at prices of property up for sale and then think that the one they are looking at is cheap/reasonable in comparison, when in fact they are basing it on comparison with overpriced property ... that would create a 'self fulfilling prophecy' and lift actual prices.

 

It is not so easy to gather representative information about the housing market. Statistical information is sparse and heavily influenced by developments in the NCR, and based on new loans reporting by banks rather than actual transactions in the housing market.
For a small local market like the Dumaguete area I cannot find any statistics. That means that unless I didn't search well enough, most opinions about the market are based on anecdotal evidence at best, and on rumours at worst.
That said, my impression of the local property market is that there are several factors that play a decisive role:
1. Rents in Dumaguete are high, relative to the actual value of properties. As long as this situation persists, property owners have an incentive to rent out rather than sell as long as they can afford to stay invested.
2. Some properties are said to be for sale, but the asking price (through the roof) does not reflect any eagerness to find a buyer. Either the owner lives on another planet or they are looking to find a fool, so imho these asking prices are a poor reflection of "the market".
3. I see estimates of between 5000 and 7000 expats living in the Dumaguete area, and for what that number is worth, that seems to me a major impact on both the rentals and selling side of the real estate market, especially in the "4 million and up segment". Moreover, the "promotion boom" for living in Dumaguete is still going strong ( see this recent article 10 Reasons to visit or live in Dumaguete, the Philippines | HuffPost )
4. Fast economic growth in the Philippines definitely influences the real estate market as a whole, but one can question the relevance of the national numbers for our province. Negros Oriental remains one of the poorest in the country, with a poverty incidence of around 50% and agriculture with its low productivity still a major part of economic activity.

I would conclude that while the long term outlook for the property market looks pretty solid, one should be careful when looking to buy a lot / house and lot. If you fall victim to one of the rather staggering instances of mispricing, and pay way too much, then even a solid market won't help the "under water" value of your investment for a long long time.
And to kick in the old open door, make sure you know the law with regard to what you can and cannot own as an expat in this country.

 

As our Barangay Road has shrunk from 6 meters now down to 4 meters and that is legal. We all say "Buyer beware" and this is so very true. A Barangay Road ( concreted or not) is at a Given width and the Plans of these are at City hall BUT as has happened to me My neighbour has reclaimed 2 meters donated to the Barangay for Barangay use, there seemed to be a problem with his neighbours opposite that continued to Park a Pick up & BB his Lechon on the Open Road. all well and Good but the arguments escalated to one of Frenzy and he said OK if you won't do the decent thing and Park you vehicle in the Front of your property ( His Back is on the road in Question) and cook your pigs in your garden I will take back my donated land to the 4 meters agreed and Documented. So we all now suffer for 1 Idiot
Moral is, all that is on any Paper work needs very very close scrutiny to ensure no reclamations can be made

In the main Yes but you would need to make sure the Barangay Road is actual Barangay owned. the point I made before shows that these Roads are not always where they should be and at a width they should be and people can and do reclaim parts that are actually on their Land. One neighbour has told us that he is going to have to Move his CR wall in 1.5 feet as it actually covers part of the Road by that much.
It is a never ending and twisted route we follow and it seems those we consider being Silly and sometimes Stupid, actually do have a leg to Stand on regardless of who they upset, The smiles from me will come when this neighbour finds the Fire Truck or the Noreco Boom Wagon try and Maneuver the bend that he has created with his attitude.

 

Steve,
I think we can quickly agree that personal experience in other locations/countries doesn't add much to finding a logical answer to the true value of a lot in/around Dumaguete.
To illustrate, I'm thinking that if someone's experience is limited to say living in Alaska or North Dakota, then even if they were to move inside the United States to say Maryland or Florida they would still get a nasty surprise if they would expect similar prices for land.
Why? Well, population density comes to mind and for Florida (and Maryland to a lesser degree) the climate thing also. Then there's a difference in economic activity in the 4 areas, which translates in rather big differences in available average income and wealth.
If I were to compare my personal experience before I came to the Philippines with landprices here then here is incredibly cheap (because in the Netherlands land is rather expensive).
So, I am thinking that personal experience will add a psychological factor for the individual when comparing price levels, but it is best to leave out "feelings" when making an investment, as I am sure you will agree.

Yes, true, average income in the Philippines is a lot lower. Average is not the same as median by the way.
The problem with that is that in a developing nation like the Philippines, the average income is meaningless. That is because there is a very large income inequality here, and a wealth distribution that is even worse.
And yes I know, both those statistics may remind you of the USA, where they are similarly in "american dream" land for a few and "living paycheck to paycheck" for most.
Still, the number of people (locals) who are able to afford a nice house, nice car, etc. is growing in the Philippines, (most likely helped by avoiding to pay income tax).

Yes, land in the Philippines is not the same as land in the USA. Lacking infrastructure (roads etc.) and nature confine 95% of the population to a narrow coastal strip of land on most islands. Likewise, the building lots you would be interested in are also in that narrow coastal strip. Moreover, the Philippines has a population density of around 400 per square kilometer and that number doesn't take the "coastal strip" aspect into account.
In comparison, the USA has around 35 people per square km. In other words, land here is scarce compared to the USA, more so if you take into account the coastal strip thing.

There is no such thing as a "sensible" ratio of income to property prices.
There is maybe a relation between the income of those who are wealthy enough to consider buying property or can qualify for a mortgage (which in the Philippines would be a small portion of the population) and the prices for land, but "wealthy" has little to do with current income.

Oh I am sure you can buy some farmland cheaply out in the mountains without electricity, water and road access, but not anywhere where you or me would consider building a house.

Continuing fast economic development and inflation will keep up demand from well to do locals, and the ongoing promotion of Dumaguete as a superior place to retire will do the same for demand from foreigners (whether they rent or buy doesn't really matter, they still have an impact on prices).
We don't disagree about much of the asking prices for real estate in the Dumaguete area though (way overpriced), as you may have already concluded from my earlier posts in this thread.

 

To the Philippines and the wonders therein

 

thank god, I am not in the real estate business here - I was searching for a beach lot one year and went through all the troubles, I bought my property here now once, I bought it cheap, and that's it, forever