Homebuyer activity has highlighted the housing shortage in 2021 – particularly in the entry-and mid-level price ranges – due to the ever-growing number of households in the country. It’s becoming increasingly difficult to meet the demand for new homes because of supply chain challenges, labor shortages, and regulatory policies impeding home construction, thus raising prices.
Prospects for the real estate market are looking brighter for 2022, as the demand for luxury and mid-income residential developments predict a steady recovery.
Experts expect the housing market to be a tad gentler next year, but they encourage preparation, as the home-buying frenzy will require stamina and strategy. Here are a few housing market trends shaping up for 2022:
Projected Recovery in Real Estate Property Prices
The Philippines’ real estate market was severely affected by the financial crisis, and health-related issues have resulted in a sharp downturn in the economy, which has led market watchers to focus on pricing trends for the coming year.
In 2022, property values in the Philippines are expected to recover. Manila Bulletin, quoting the International Real Estate Federation (FIABCI), reported this after the crash it endured for two years in the pre-sale and secondary markets.
In the first semester of 2022, the industry is expected to improve. Florentino Dulalia Jr., FIABCI-Philippines chairman emeritus, said it might happen by the end of 2021, in line with FIABCI World Council of Experts’ global survey results.
House prices in the Philippines are expected to rise by 1.8 percent in 2019-2020 and 5.6 percent in 2020 to the current year, according to the poll of 226 cities.
Colliers International Philippines, a professional services and investment management organization, has also lent its support to next year’s property price rebound.
According to the corporation, the rebound is mainly due to the significant reduction in capital values last year. Colliers used the Global Financial Crisis as a point of comparison. Rents in the secondary market fell by 7.8 percent, and property values fell by 13.2 percent.
Although prices and rental rates have fallen by 14.5 and 15.4 percent, respectively, compared to the Asian Financial Crisis of 2008, the reduction is less severe.
“A resurgence in domestic and foreign investor optimism and a recovery in office space absorption is expected to drive property prices up by 1.5% and rents by 1.7% in 2022”, according to Colliers.
BPO Industry Remains to be Top Buyers
Investment in real estate in 2022 is expected to rise even more due to the business process outsourcing (BPO) industry. Condominium and other property leases are expected to rise in the Philippines over the next 18 months as more multinational corporations outsource and offshore their company.
The BPO sector continues to grow despite economic setbacks. Investors in the Philippines’ Economic Zone Authority (EZA) have pledged a 37% increase in IT and BPM investments. It grew from Php8.32 billion in 2019 to Php11.4 billion in 2020.
The public should expect to see a rise in real estate purchase and rental rates in 2022 because of these increasing populations.
Foreign Investors to Help Pick-up Demand
At the beginning of the year, the Philippines received Php36.49 billion in foreign investment. According to the Philippine Statistics Authority, the United States has offered Php13.4 billion, while Taiwan and Japan have pledged Php4.4 billion and Php4.3 billion, respectively. An additional 24,239 jobs will be created thanks to the approved projects.
The demand for more workplaces is expected to rise dramatically due to more employment being created. Companies will have to rent space for their industrial and commercial purposes. The real estate business, as they say, is driven by employment, and the year 2022 looks promising for the industry.
OFWs: Primary Drivers of Residential Property Demand
In 2022, the rise in housing demand would be fueled by the influx of Filipinos working abroad. Housing demand in the Philippines is significantly influenced by overseas workers’ (OFWs) remittances.
According to Colliers International, the country’s affordable to middle-income real estate market is supported by the country’s modern-day heroes. Additionally, a boost in consumer confidence and the reopening of businesses might be expected due to the country’s vaccination program being accelerated. Office buildings and other commercial entities will reopen with the economy’s recovery.
Stiff Competition Among Homebuyers
With a shortage of housing and eager purchasers eager to get in, there remains a lot of competition in the market, so home buying isn’t going to become easier anytime soon. Additionally, many homebuyers have the freedom to relocate and work from anywhere, thanks to the widespread acceptance of remote work.
The demographics are also important. Homebuying among millennials is at an all-time high, as they’ve accounted for the majority of buyers in recent years. However, Boomers are slowly downsizing; this creates a lot of competition for smaller and entry-level properties.
Growth of Millennial Buyers
There is a perception that millennials are entitled, spoilt, and materialistic. This is mostly because persons born between 1981 and 1996 have a unique perspective on money and investments.
According to Anxios, many millennials, whose significant portion is reaching 30 years old in 2021, are almost certainly on their way to owning a property if they haven’t secured one yet.
This group, which includes the oldest and youngest members of this age, is reportedly seeking properties for sale to expand their homes and companies.
According to Forbes, millennials will be becoming 30 years old by 2022, and the “generational progression” will continue until 2024. Filipinos aged 25 to 34 make up the majority of internet homebuyers, according to a report published in Esquire Philippines.