Construction materials include cement, sand, gravel, bricks, windows, and doors, which will be priced more in the market because of the increased gas prices. As a result, it will negatively affect the real estate market since construction companies will have to increase their profit margins on these items during selling. The constantly-increasing input costs impact all businesses tremendously.
As real estate is one of the most vital industries to drive economic progress, whether personal, for a company, or for a nation, the rising cost of construction materials does not help improve people's purchasing power.
Effects on pricing
These effects are felt by nearly all home buyers, real estate agents, as well as lenders, and builders. The result is higher borrowing costs, making it more challenging to buy a house that can be squeezed into an affordable price range. In this case, houses won't be so dear in terms of affordability. Builders will need to re-adjust costs due to the rarity of affordable prices nowadays. On a lighter note, it is a good opportunity for companies to think about building structures out of reusable materials in a more energy-efficient way with less waste.
Effects on human resources and customer retention
In efforts to lower the prices for home buyers, construction companies might need to reduce their workers at some point, limiting it to only the most skilled workers and extremely qualified professionals.
In real estate sales, pricing will play a more significant part in the challenge. Profiling home buyers will be trickier because sales professionals become more cautious about giving the buyers properties way beyond their budget, so attrition is high. Real estate agents need to ensure that customers don't chew more than they can swallow to keep customer relationships in the long term.
Is it all that bad?
The answer is no. The Philippine government is still continuing the infrastructure developments all around the country. Yes, there is currently high public debt, but at the same time, the appreciation of properties near the areas where these structures will be built shall help the country attract more foreign investors. The high construction costs matter so much, but once one has started to adjust and accept the new normal, mindsets are refocused on building wealth. They would eventually yield returns even to sound decisions, just as getting a condominium property at a locked-in rate, payable for a certain period.
What can things be done to ensure that real estate is still a sound investment?
Before jumping into real estate investing, it's apparent that one must build enough cash flow to sustain such a huge investment. One should understand that real estate does not make finances liquid. This is a long-term investment, and if one anticipates that selling will become an option in the next few years, then the investor is not yet ready to commit. Selling the property in a rush does not yield good results in terms of returns. Real estate sales are not as easy as retail because of their value. Rush sale results in selling the property lower than one bought it for. This is not financially sound unless the owner has been renting out the property for a long time before selling it.
Emergency funds must be built before considering real estate. Otherwise, it will all be a pain in the neck if every paycheck goes to the investment. The buyer must have an insurance policy to cover it if they are out of the picture. Without an insurance policy, in case a married couple bought it together, one will have to assume the payments, and it will surely become challenging to keep it if one is not so well off for the purchase or in case the breadwinner is no longer able to work and pay for the purchase, the insurance is in place instead of getting the family to scrounge for funds to keep the investment. Health insurance also ensures that any unforeseen expenses due to health issues will be taken care of.
Job security or business stability is required so that an investor either pays the property at a lower cost or to make sure one can commit to this long-term agreement.
Who to trust with real estate investing
Naturally, an investor will consider his relationship with a trusted real estate agent. Preferably someone who is always reachable to do business with. Another is the developer who takes charge of the building's quality. Track records must be scrutinized for purposes of due diligence.
Vista Residences Inc.'s website lets investors get in touch with verified real estate sales professionals to do business with condominium property investments. This company is under the country's largest homebuilder, Vista Land & Lifescapes, Inc.
Foreign investors trust the company such that it had to build its platform to have digital banking in place. Filipinos have become more investment savvy over the past decade, and condominium properties are the most common and affordable choices since the larger population of the workforce are young professionals who are attuned to traveling around the world and getting paid hefty amounts of money for doing so. At the same time, a lot young people are now building their own businesses and focusing on their goals of attaining financial and time freedom.
Vista Residences offers comfortable spaces that allow access to the most basic goods, business hubs, and tourist spots that would attract people to live there and consider the possibility of acquiring multiple properties to manage and rent out. The leasing team is also in place to offer worry-free leasing, human resource management, and property maintenance.
Vista Residences has a stellar record of building top-tier properties that would last for generations. Indeed, Vista has long been a partner for Filipinos to ensure their wealth portfolio is continuously solidified.
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.