4 Factors That Affect The Real Estate Market In 2021

What are the factors that affect the real estate market in 2021?

1. Rate of vaccine rollouts
2. Rising inflation rates
3. Sustained land value appreciation
4. Shifting property needs

The real estate market in the Philippines is pivoting for a bounce-back as one of the hotspots for foreign property investors in Southeast Asia.  The country is well-positioned to capitalize on the post-pandemic changes with its dynamic economy, increasing urbanization, and strong consumer demand.  However, before the country marches on to the road to recovery, it is important to know the factors that affect the real estate market in 2021.

As we all know, the COVID-19 resulted in quarantine restrictions, travel limitations, reduced consumer confidence, and economic volatility.  Fortunately, the outlook for the real estate industry this year is leaning towards significant growth and improvement from the negative impacts of the pandemic.

Here are four factors that will continue to affect the real estate market in 2021. All these are driving components that property developers, investors, and residents should manage.

Rate Of Vaccine Rollouts

Different types of vaccines are continuously being distributed and shipped across the Philippines including doses for AstraZeneca, Sinovac, Pfizer, Moderna, AstraZeneca, and Johnson & Johnson. COVID-19 vaccination started in March 2021. As of July 2021, approximately 9.7 million people received their first dose of the vaccine, while 3.5 already received both doses.

According to experts, the rollout of vaccines across the nation is providing an optimistic outlook for economic recovery and a much-needed boost for  real estate investments and customer demand. With the increased distribution of COVID-19 vaccines, the future of the real estate market is promising, with a 7.8% recovery rate in 2021. If more people get vaccinated, the Philippine real estate market is expected to slowly recuperate due to an increase in consumer confidence and a decrease in travel restrictions.

Rising Inflation Rates

Inflation rates have also risen. In the Philippines, inflation rates climbed up to 4.5% this 2021. This is a huge increase compared to the 2.1% inflation rate back in 2020. 

When inflation rates are high, it can be difficult to get a mortgage. This translates to buyers having less purchasing power. In the same way, rising inflation rates can be a potential negative factor for real estate developers, as investors and buyers may get discouraged by the increased cost of borrowing. In addition, housing prices rise when the economy has high inflation rates.

If developers can offer favorable mortgage terms for buyers and investors, they can maintain the demand for their properties. This is because real estate properties have intrinsic value; people will need shelter regardless of the current market situation. Take note, however, that vacation rentals and locations that are driven by tourism may not fare as well as other forms of real estate properties due to travel requirements.

Sustained Land Value Appreciation

According to the Colliers 2021 Quarterly report on real estate properties, residential vacancy is expected to increase to 17.2% from an initial projection of 16.9%. This is because there is a significant number of new property completions in 2020. Despite the economic slowdown, real estate developers were quick to realize that land value appreciation will be sustained — especially those in strategic locations.

For residents, cities like Batangas, Cebu, Cagayan de Oro, Pampanga, and Metro Manila are popular locations for students, young professionals, families, and expats that value being nearby essential establishments like airports, transportation hubs, hospitals, schools, markets, and commercial areas. Interested investors, on the other hand, will show a strong preference for the same cities with residences nearby major business hubs. All these factors will translate to an appreciation of land values. For both investors and developers, these present endless opportunities for increasing revenue. 

Shifting Property Needs

Everyone reconsidered their way of living during the COVID-19 pandemic. People have been spending more time indoors to mitigate the chances of getting infected. Therefore, there has been a clear shift in property needs and trends.

More than a real estate market trend, people want to live in a secure home and community. Security has always been a non-negotiable requirement for property preferences but this was further enhanced during COVID-19. During the new normal, the definition of secure properties refers to those with provision for contactless transactions, alarm systems for instances of burglary, thief, or trespassing;  natural disaster like fire, flooding, earthquakes;  protection capabilities like security-manned entrance gates, CCTV systems; and even safety protocols for avoiding infection like temperature checks, contact tracing, regular property grounds sanitation. And transitional spaces for allowing visitor sanitation.

Moreover, there is an ongoing demand for properties with plenty of green spaces and places for physical activities. One of the major things that people realized during the pandemic is that everyone is entitled to take time to enjoy the outdoors and take care of their health and well-being.

All this being said, the ​​top subdivision developers in the Philippines like Pueblo de Oro are taking their cue from the shifting property needs of residents by offering safety and security. This was master-planned by building communities with plenty of green spaces like pocket gardens, playgrounds, sidewalks with greeneries, activity areas,  among other features.  In addition, health protocols are being strictly observed across every subdivision for the homeowners’ peace of mind.

Key Takeaway

The factors that affect the real estate market in 2021 present numerous opportunities for investors, residents, and developers as they are focused on adaptability and safety.

As challenging as these past years have been due to the pandemic, a glimmer of hope is presented this year in the real estate industry.

At Pueblo De Oro, we have recognized these factors affecting the real estate market for 2021 and quickly came up with solutions that will benefit our residents and investors. We have premium communities in Batangas, Pampanga, Cebu, and Cagayan de Oro that are ready to offer you the gold standard in community living.

For inquiries regarding purchasing a Pueblo de Oro residence, you may click our team at +63 (2) 790-2200. Start investing today! You can check out our online house tours by clicking here.