It’s no question that the overall economic impact of the increase in gas prices hurts everyone. The recent and ongoing geopolitical conflict or war between Russia and Ukraine immediately affected the world’s economy. Rich or poor suffer the blows of higher prices of all goods and services—thus, affecting industries that contribute so much to every country’s economy.
Gas price volatility is also affected by hurricanes, snowy winter seasons, flooding, and other natural phenomena. Now that people are aware or worried about the rising costs of living, their buying behavior also impacts this. Hoarding higher amounts of gallons is a behavior that could also affect the gas price.
This is more than just the cost of a gas fill. For an individual, a higher price means, less money to spend on other important goods. For a business, this means another round of cost-benefit analysis, an increase in prices, and more time for managing employees’ product knowledge and training in terms of pacifying irate customers.
The Philippines’ oil price hike drags the economy—affecting consumer spending, airline tickets, and job hiring. With Russia being a country with the world’s largest oil reserve, it’s no surprise all countries suffer.
How does the oil price hike impact the Real Estate Industry?
The Cost of Building and Transportation
The construction industry relies so much on logistics. From importation to taking the building materials to the site would cost so much more. This means a higher price in property investing especially with properties that are being built at the time the prices are higher.
Plans of urbanization in other areas in the Philippines will be reconsidered since construction companies might only have a higher cost and very low profit.
The companies might hold off since the area or country’s economic health becomes uncertain. A great example is they might put a pause on hiring Real Estate Sales Professionals which could mean lower sales volume. Or reducing the number of skilled workers and slowing down a building’s turnover. Employees would push for a higher salary to meet the higher costs of living and commute.
Great talents might not be so available in this case because people would always consider the cost of public commute before accepting a job—regardless of the prestigious job title, or slightly higher salary.
There are a lot of investors eyeing Philippine Real Estate. Due to the higher price of flying, they might hesitate or choose countries to fly to. The Philippines, being an archipelago might not be a good choice to look for investments in.
Travel costs as a tourist
Besides property investors, local and international tourists would have to pay the higher cost of food, transport, and accommodation—this means a reevaluation of their spending habits, and this does not contribute to the local economy that relies on tourists’ purchasing power.
People will likely move to a place near their employment centers, leaving lower demand in areas further from business hubs. The distribution of wealth across the country would greatly be impacted. People’s reluctance in living further from work happens even if the home prices are more affordable in further areas.
Moving down the price ladder
People who are seriously considering condo living will look for more affordable options. A single-family home might consider a 1-bedroom condo instead of two or even pause on their purchasing decision. This hurts not only the buyer but also the economy.
Real estate property owners who purchased it for the purpose of renting it out will have lower demand as the prices of all commodities rise, people would rethink the prices of rent, and even move out to decrease living expenses. Tourists who usually prefer premium locations will save up by looking for less expensive options. Not a good time for hotels, resorts, and highly-priced AirBnB.
With the possibility of the continuous hike on gas, is it wise to buy an electric car to avoid gas or invest in a condo near your work?
To sum it all up, the gas price hike made renting, constructing, and owning a property very expensive. Prices might come down, but the world needs to prepare otherwise. Geopolitical conflicts have made it harder to save up for buying properties.
This could lead to financial hardships, causing people to lose their jobs, and hard-earned belongings, and zero out their bank accounts. No one is happy. In fact, people are now anxious about this uncertainty. The next generation reconsidered the plans of having a family, buying a house, moving to a better city, and finding an office-based job after the pandemic, all these plans were reconsidered, because of the gas price hike.
Understand that cutting costs in new building construction will lead to low quality, and undermines the safety of real estate property owners, the increase in prices is imminent. It is even more financially sound to invest early instead of putting things off. Despite the prices going up, real estate would still yield higher returns over time. As the costs of living rise, salaries must follow to help aide people in cushioning their bank accounts from the effects of inflation and soaring rates.
Calculated risks will save a person regardless of the uncertainty that everyone is in now. Real estate companies just like Vista Residences Inc. have top-tier professionals available on the website who would guide investors into well-suited choices of investment.
Creating wealth will always ensure that the future is bright. Improve skills, understanding investments, learning high-income skills, building strong connections, and understanding sustainability are things that people could do to create multiple sources of income.
The best thing is to calm down while doing what would make things better in terms of money management and wealth-building. As always, reliance on salary to be the sole income is never wise. Make entrepreneurial and investment ventures a habit to cushion the financial impact of the changes in the economy. The goal is to make money while sleeping. Regardless of the higher cost, real estate can still make sure that that goal is met. The internet can serve as a guide to getting free learning opportunities.
If you are thinking of moving into a new condominium, check out Vista Residences!
Vista Residences is the condominium arm of the country’s largest homebuilder, Vista Land & Lifescapes, Inc. that offers ready for occupancy and pre-selling condominium projects in Manila, Makati, Mandaluyong, Quezon City, Ortigas, Baguio, Cebu, and CDO that are strategically located within major cities, in close proximity to premium universities, transit-oriented locations, and developed business districts.
For more information on Vista Residences, email [email protected], follow @VistaResidencesOfficial on Facebook, Twitter, Instagram, and YouTube, or call the Marketing Office at 0999 886 4262 / 0917 582 5167.