How Population Growth Affects the Real Estate Market

By: Hanna Rubio
How Population Growth Affects the Real Estate Market

What Are the Factors Affecting the Real Estate Market?

Just like anything else, some factors affect real estate Philippines. Such factors can affect the real estate market positively or negatively. It can also make the properties more attractive for investors which helps on increasing the demand. But what are the factors that affect and drive the real estate market?

1. Economic Status

The economy’s performance is measured by its GDP, prices of services and goods, employment data, investment, inflation, the country’s monetary conditions, etc. All these affect the economic growth of a country. When one’s economy is growing, the demand for the real estate market will also increase along with it since a lot more people are capable and have enough money to invest and acquire property and vice versa when the economy is down.

2. Government Policies

The real estate market can go up or down according to a certain country’s government policies and guidelines. The incentives and deductions the government provides encourage people to invest in certain properties. Without it, much fewer investors will be willing to invest because there is less motivation to do so. This factor has a direct impact on property prices and demand which can either boost or decrease the real estate market value.

3. Interest rate

When interest rates are low, the demand for property investment and its prices are relatively high. This is because the mortgage costs are also lower. However, when the interest rates are high, mortgage loans are also higher which makes the demand for property investment drop because people are discouraged to make an investment despite the prices also going down.

4. Demographic

And finally, demographics. This is what measures the population of a specific country according to age, income, gender, race, and overall population growth. The demographic affects the real estate market prices and demand. The higher the population growth is, the higher the demand for housing opportunities. This can also help in determining what type of properties are in demand based on different age ranges and preferences. And this specific factor will be the focus of this article. You’ll learn about the current population and real estate situation of the Philippines and the relationship between population and real estate value.


How Is the Growth of the Population in the Philippines at Present?

The current population growth of the Philippines is over 110 million with a population growth rate of 1.3%. The current share of the Philippines to the world population is up to 1.46% making the country rank 13 in the list of country population. While there is a decrease in the Philippine population growth, it is still viewed as positive since the birth rate exceeds the number of deaths. The decrease in population growth can also be because of effective family planning and the wide use of contraceptives. The top three most populated cities in the Philippines are Quezon City, Manila, and Caloocan City.

What Is the Impact of Population Growth on the Economy?

The increase in population growth has a positive impact on the economy. When the population growth is higher, the labor force is high as well which means that there are a large number of available workers for different industries which can help drive economic growth. Consequently, as the population continues to grow, the consumer market expands as well because the demand for goods and services is also higher.

What Is the Current Real Estate Status of the Philippines?

After recovering from the repercussions of COVID-19, the status of real estate in the Philippines is continuously increasing. Colliers mentioned that in order for real estate to fully recover and gain traction in the market, developers should incorporate preferences that were developed during the pandemic such as having proper ventilation, sustainable features, and facilities, green and open spaces for residents, and amenities that will allow workers to work-from-home with convenience for residential properties. Since everything is going back to normal, the demand for properties used for office, industrial, hotel, and retail is said to increase this year 2023 as well, Collier added. The Philippine real estate growth rate last 2022 is recorded at 7.6% and is expected to grow at least 6% to 7% this year.

How Does Population Growth Affect the Property Market?

Population growth helps determine the current status of the property market. When the population growth is higher, the demand for properties is also higher. When this happens the prices of properties and units in a real estate market soar high due to the fact that more and more people are willing to invest and acquire properties. Despite the higher prices, people are pushing through buying properties for the reason that there are higher chances that their value will gradually increase over time.


What Are the Advantages of Population Growth That Developers Can Leverage?

Job Creation

High population growth can help stimulate economic growth which can then lead to job creation. More and more opportunities will be available for job hunters. When more people are employed, they are becoming more capable and willing to spend money on property and investment.

Higher demand for Housing

As population growth increases, the demand for housing increases along with it. More people will now be on the lookout for residential properties that live up to their expectations. Property developers should take this opportunity by developing more residential units in attractive locations that will entice homebuyers to purchase a property. This will not only drive the demand for housing but also the real estate market growth.

Investment Opportunities

Investment opportunities will increase as long as the population growth is high because people will see the importance of investing in properties that appreciate as time goes by.

Growth in the rental market

For those who own rental properties, high population growth leads to growth in the rental market. Not everyone can buy a property but almost everyone is on the lookout for housing opportunities. When the demand for rental residential space is higher, landlords can maximize their investment by increasing rental charges.

Increase in Property Value

For home developers and owners, an increase in population growth is good news because that also means that more people are competing to own a property which improves its property value. This also leads to a higher return on investment and resale value.

Read more: Using Demographic Data to Research the Property Market in a Specific Area

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