Should I Buy the House Now? Or Save Money First and Buy the House Later?
I was reminded of this frequent client question, particularly from first-time home buyers, when I heard the purchase price per square meter for a residential lot we were listing in Sikatuna Village, Quezon City, Philippines.
Sikatuna Village, Quezon City Lot for Sale – P9.00 per square meter
That’s right. P9.00! Way back in 1953.
By September 2016, lots in the Sikatuna Village, UP Village and Teacher’s Village area were already approaching P35,000 per square meter. Which tells us that land values in the community, on average, appreciated 14% annually for the past 63 years.
This alone is a great argument against waiting. Since unless you can save and park your funds in an investment instrument that pays you higher than 14% per year consistently, capital appreciation alone (the rate at which the property’s value increases) will far outstrip your capacity to save and your saved funds ability to grow.
What Return on Savings??!
Regular savings accounts return interests below 1%. Which means given inflation one is actually losing money by keeping it in the bank. You’re far better off investing in UITFs, mutual funds and blue-chip stocks.
Lower Cost of Borrowing Money
When I was still in a publicly-listed real estate development company one of the reasons I often mentioned in our annual reports for our market optimism is the current low-interest situation in the Philippines. This has been going on for the past several years and has no doubt fueled the boom in real estate.
So… should you save first and wait? I think not. Time will be working against you.
Wait, do all real estate properties appreciate?? That’s another discussion.
Erwin M. De Pedro
Co-Founder / Director for Sales & Marketing
Real Estate Broker License
PRC Reg Certificate AA017736
PRC License No. 0015841
Real Estate Appraiser License
PRC Reg Certificate AA004279
PRC License No. 0004320
Member: Philippine Association of Real Estate Boards – Quezon City Real Estate Board, Inc.