A Property Buying Guide for the Filipino Millennial
Several studies conducted worldwide suggest that millennials are renting or living with their parents longer. The major implication of these studies is that people born between 1981 and 1997 see homeownership as a near impossibility -- choosing instead to keep their spare income either in a bank or in their own preferred form of savings. However, many financial analysts and real estate companies agree that today’s generation of young adults are actually perfectly set to purchase their own home, with a relatively small amount of risk.
The latest growth forecast of the Philippine real estate market is quite optimistic. According to the Bangko Sentral ng Pilipinas (BSP), exposure of the real estate industry to Philippine banks eased below 20% in the first quarter. This means that housing prices have remained steady, amidst sustained demand. Given these statistics, the stage is set for proper real estate investments. Millennials would do well to take note of the following suggestions, compiled and consolidated by several real estate experts.
Understand the many down-payment options
One of the more popular real estate choices in the market today is an apartment in Makati or BGC. These key business areas offer not only a prime location but high potential for passive income. That being said, millennials may shy away from the idea, convinced that such assets would be “too expensive”. Real estate companies encourage potential home buyers and owners to consider the many different types of down-payment and loan options the Philippines has. Apart from the government-assisted funds (which offer great terms, especially if one is still young and gainfully employed), there are other bank-accommodated loans that one can apply for. Loan types and down-payment options are also dependent on the type of asset being considered. So, for example, a house and lot in Nuvali would require different requirements and options than an apartment for sale in BGC.
Draft the debt-to-income ratio to healthy levels
The beautiful part of purchasing a real estate property while young is that most financial institutions and companies are willing to give more leeway. This is because it is assumed that millennials still have many years ahead of them to pay off their debt. Still, it is important that the debt-to-income ratio be perfectly feasible. Millennials should consider whether their current (and not their expected) income is capable of sustaining the monthly payments.
Ask and research
As with any purchase, it would do well to ask and do one’s research. There are a lot of online resources available that can help the business-minded millennial. The best recommendation, however, is to personally speak with a real estate agent so that all concerns and fears can be immediately addressed.
Since millennials are looking are working somewhere in Ortigas, Makati, BGC and Quezon City, the best option to invest on is a condo. This is to eliminate all the hardships of commuting back and forth, long hours of waiting for the next train or FX and all the hassles of being stuck in the rush hour traffic. All of these transportation expenses could instead go to a monthly downpayment of a condo.