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3 reasons why you should build your dream home now!!!

One of the biggest dream of every family today is have their own home, a place they could call their own. Today with the influx of OFW remittance and the success of the BPO industry many families have been able to reach this dream.

For the average "Joe" planning, saving up or thinking of building their own home in the near future, I have gathered some information for you and would like to share why it would be best to build your home as soon as possible.

1. Low "Home loan" interest rates

Interest rates for a 10 year loan

Home loans interest rates have been getting lower and lower during the last couple of years, The

table above is a sample of interest rates for 10 year loans and for some banks it has lowered by up to 2.5%. That's great savings considering that it's computed on a per annum basis. If i did my math correctly, I believe the 2.5% difference for a Php1million loan would translate to Php165,000 savings in interest payments.

Likewise, a couple of weeks ago the Home Development Mutual Fund (HDMF) or Pag-IBIG Fund

announced that they are cutting interest rates to encourage home loans to as low as 4.5%. For 10

year loans the interest rates would be as low as 8.035% from the previous rate of 9%.

2. Rising Construction cost:

Construction cost has also been in the rise as both material and labor cost has increased in the last couple of years.

Cement prices:

The price of cement alone has increased by about Php30 per bag or about 15% over the last 3 years.

(Source: Langdon & Seah Construction cost handbook 2015)

Timber prices:

Timber cost has increased by 40&70% over the last 5 years.

(Source: Langdon & Seah Construction cost handbook 2015)

Minimum wage:

Minimum wage continue to steadily rise, Today minimum wage is at Php481.00 from Php404.00 in 2010.

(Source: Langdon & Seah Construction cost handbook 2015)

Trends in construction cost have been steadily rising and there is no indication that it will go down

anytime soon, Easily an increase of 20% over the last 5 years, building as soon as possible could be the wise move as there is no stopping this rise in construction cost.

Construction cost has steadily increased by about 20% over the last 5 yrs.

3. Rising Real Estate Cost

A third reason why building your dream home now would be best if done as soon as possible is the continuous rise in land value. The table below shows data from the 3 major CBD's in the country, I take this as representative of the land value trend for the rest of the metropolis. If you could look at Makati from 2010 to the projected value for the 4th qtr of 2015, it shall increase from 300,000 to 500,000 in just 5 years. Thats Php200,000/sqm increase in value in just 5 yrs.

According to Collier International's research "Land values are expected to increase between 6 and 8% in the next 12 months due to strong demand for land assets in these areas amid increasing scarcity of available land options."

I'm sure rates and value will vary depending on which area of the metropolis you are but the trend is there and its pointing upwards. Land value will rise and will continue to rise as the years come.

All things considered, I believe that the country is in a good position economically, People have more disposable income on their hand, thus demand for real estate and construction are on an upward trend. I believe it would be best to lock in your house and build as soon as possible before things get too expensive. Five years ago, a 180sqm 3-bedroom townhouse would cost you Php2,700,000 to construct, these days, it would take Php3,240,000 at the minimum. Id say thats quite a difference in just five years. The thing about this is that it also increases tax and consultants fees as their costs are based on the prevailing construction costs.

Low interest home loans available in the market these days are opportunities one should consider and take advantage of. The opportunity to get in while the interest rates are still low is like finding a window that might close anytime in the near future.

This is the current trend of construction these days, the better things get for the country, the bigger the demand for real estate and construction, and according to the laws of supply and demand, the limited amount of supply should increase in worth and cost. So I would suggest that you get in while its still early, build your house now while they are still considerably affordable, and turn your dreams into reality.

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