The Effect of Covid on on Dumaguete Property Prices
One of the things people think about whenever a crisis hits is how it will affect them financially. Since many people have at least one major real estate asset in their portfolio, it is important for them to keep an eye not only on the stock market but also on the property market. Whether you are some one who has property and is afraid that your investment will be damaged, or whether you want to buy property and believe deals can now be had, it is extremely important to understand exactly what is going on in the market, and why. As the covid 19 pandemic is no doubt the single biggest crisis to face us all in this generation, lets explore what is happening, at least locally
Being involved in both the real estate marketing company, as well as being as owning a stake in a property development company, I believe that I am uniquely positioned to give some insight into what is happening, and at the same time would like to share my opinions on why
In the early stages when the scale of the pandemic was starting to become clear, my initial thoughts were that, like most crises, Dumaguete property prices would tank dramatically. Of course, when this happens, people who hold leveraged properties might be desperate for sales rather than face foreclosure and a total loss of their asset value. The people with cash, are kings, and they can scoop up properties for investment or personal use at greatly discounted rates. Since our companies are both buyers and sellers, this would have been a two edged sword. We would have loved to pick up some steals, but we assumed that turning over our existing inventory would be challenging and could cause a potential liquidity crisis if the pandemic was prolonged. As it turned out I was wrong, at least so far to date. In the past 2 months, we have experienced sales volume almost twice as much as our typical average, and so far have not had a single property offered to us in desperation.
So why is this happening, or not happening, here in the Dumaguete area?
I think one of the biggest factors is quite simple. Here in the Dumaguete region, and to some degree in the provincial areas of The Philippines most people do not buy their properties using bank financing. Most deals are on a cash basis rather than with mortgage financing, which leaves owners with more flexibility to weather the storm without any monthly payment pressures. The typical situation where, “cannot pass up” deals pop up is when a family member is sick and money is needed to pay for medical bills. Thankfully, Dumaguete has not been hit hard by the pandemic, so beyond the regular incidences, there is simply not an increased number of families under pressure to pay medical bills for loved ones.
The second biggest factor I believe is that rather than there being less buyers, there are more, and this has been a huge surprise. To try and get an understanding of why this is happening, we have been asking just about all the clients who come in the door, one simple question. Why are you considering buying now? Though there was some variations, the basic theme has been that in comparison, the Dumaguete area just seems to be a better place to be during this lock-down and virus, and more importantly if lock-downs becomes the new normal for the foreseeable future.To better visualize this feeling, try and imagine yourself in a place like Cebu or Manila. If, as has already happened, covid 19 or any future virus hits, the only way to control it in a major metropolitan area with extremely high population density, is a quarantine so strict that you will be basically under house arrest for months. Adding to the pain is that most people in these urban areas live in apartments or condominiums, and the toll on ones sanity becomes unimaginable. In a place like Dumaguete is not perfect of course, but do have several things going for it. First off, the spread can be much easier contained in this lower density island . Second, if or when lock downs do become necessary, the vast majority of people live in houses and at least can get some amount of yard time in the fresh air and sunlight.
Though there are definitely more factors involved, the basic principles of supply and demand are at play here. There are few pressures on sellers, meaning supply is not threatened, and due to the relative attractiveness of Dumaguete when compared to the big cities, demand is actually increasing. Now that these things have been major factors, the question becomes can we use what we know to make some fairly accurate predictions of where the market is going in the future?
Personally, I believe what we have seen is the first upward bump in demand for local properties. This has been fueled by people who are already in the Philippines and want to move to the provinces either full time or at least have a part time second residence. Though the surge is substantial, it is not as high by the fact that national, inter-island travel is still severely restricted. Most people that are buying now are wither here now or have ties to people who can view the properties for them. As those inter-island travel restrictions ease over the next 3-6 months, we will see another surge. The third surge will come when international travel once again becomes possible. Corresponding with many international inquiries, I get the sense that many people who have been sitting on the fence in regards to retirement and starting their new life in the Philippines, have now made up their minds to “Just Do It”. If this does turn out to be true, then that will substantially add to what will be a pent up demand of people who will have been forced to delay their plans this year.
Are Dumaguete Property prices during the covid pandemic better for buyers or sellers?
So overall, I would suggest that if you are selling property, as long as you are patient, and not under any stress, don’t panic. The sky is definitely not falling. As long as you property is priced right, it will sell. If you are a buyer, you will probably be able to negotiate a small discount from most sellers, but don’t expect too many fire sale prices, and don’t be surprised if prices increase again 9 months to a year from now.
For more detailed information on Dumaguete property prices please contact licensed real estate broker Shirley Patron Mckissock at firstname.lastname@example.org