Manila condo price crash — or correction? What's shaking the market
Is the once-soaring high-rise property market in the capital heading for a reckoning?
Manila: Is a price crash or correction on the horizon for Manila’s condo market?
Local media reports and expert warnings hint at an ominous turn for the condominium sector.
Housing prices in the Philippines have declined for the first time in three years, according to The Philippine Star.
Price correction or crash?
Real estate insiders are bracing for what some describe as an inevitable "price correction," while others warn of a potential market "crash".
Whichever way it goes, it provides for a compelling narrative.
For condo owners and investors, the question looms large: What should you do if a price adjustment is already happening or just around the corner?
A bubble nearing its burst?
Filipino investment guru Chinkee Tan has weighed in on the unfolding drama, describing the Philippine condominium market as “undergoing a significant correction.”
He explains in a mix of Filipino and English: “Property prices have been climbing at an unprecedented rate; some condo values have doubled or tripled over the past two to three years. But now, the tide is turning.”
How did it come to this point?
At this rate of increase, it may take no time for the bubble to burst.
POGO factor
A recent move may have been providential to an industry in need of a reality check: the sharp "demand destruction" caused by the government’s clampdown on Philippine Offshore Gaming Operators (POGOs), said Tan.
These operators were once pivotal in driving the real estate rental market, especially in urban hubs.
Now, the domino effect is wreaking havoc:
Reduced demand for office spaces.
Empty condos originally rented to POGO workers.
A glut of units with fewer buyers or renters.
“Prices spiked when demand was high and supply was tight. Now, with a surplus of units and waning interest, the market is correcting itself,” Tan added in a recent video post.
In December 2023, Knight Frank’s Prime Global Cities Index revealed an astonishing 21.2 per cent year-on-year surge in prime residential prices in Metro Manila, a region spanning 16 cities and one town.
This impressive growth surpassed major global hotspots such as Dubai and Shanghai, solidifying Manila’s status as a rising star in luxury real estate.
Throughout 2023, the average price of a luxury three-bedroom unit in Metro Manila's central business districts (CBDs) saw a modest 3.98 per cent increase, reaching Php203,550/sqm ($3,571/sqm), according to Colliers International.
By early 2024, Metro Manila had achieved a remarkable milestone: it emerged as the world's fastest-growing luxury real estate market, with an impressive 26.3 per cent annual price increase — setting a new benchmark in global property markets.
What should condo owners do now?
For property owners and potential buyers, navigating this market turbulence requires strategy.
1. Assess your financial situation
If you're holding property:
Can you continue paying the mortgage without compromising other finances?
If your condo is relying solely on rental income, calculate if you can sustain payments even during a vacancy.
If the answer is No:
Negotiate with your lender for extended terms or deferred payments.
Consider selling at current market rates to avoid further losses.
2. Hold or sell?
If you’re in no immediate financial strain, patience might work in your favour. Historically, property prices tend to rebound over time. Even after a sharp correction, values may increase again at a more stable pace of 5-10% annually.
However, if you need immediate liquidity:
Act sooner rather than later to offload units before the market potentially dips further.
Accept reasonable offers, rather than holding out for unrealistic profits.
3. Rent strategically
If your unit remains unoccupied, adjust to the market by lowering rates or offering flexible lease terms, such as free utilities or partial furnishings.
Creative options like short-term rentals on Airbnb or repurposing your unit as co-living or co-working spaces could also generate income.
4. For new investors: Is this the right time to buy?
In crises, opportunities often emerge. If prices drop significantly, this could be a chance for savvy buyers with resources to acquire prime properties at bargain prices. As Tan puts it, “When others are afraid, be greedy. When others are greedy, be afraid.”
Imbalance
The real estate market in Metro Manila stands at a dramatic crossroads, with industry watchers sounding the alarm over an unsettling supply-and-demand imbalance.
Developers are pouring resources into premium projects, but the loudest call is for affordable housing — a glaring mismatch that exacerbates the perception of an overheated market.
Even though Metro Manila properties remain more affordable than their counterparts in Singapore or Bangkok, the stark gap between local income levels and soaring property costs makes them feel unattainable for many Filipinos.
A word of caution
While a price correction — or crash — can offer opportunities, it also comes with risks. Tan gave a word of caution: conduct thorough research, and seek guidance from real estate experts or financial advisors.
The Manila condominium market has reached a critical juncture, and the next chapter could bring both challenges and chances for those willing to adapt.
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