Why buying property makes sense

Property does not always make sense. The argument that property never falls in value is a nonsense, even the assertion that it doesn't fall by much, or that you would be paying rent anyway. Property is a market just like any other - except that its considerably less liquid. It can take 2-3 months to transfer property title. So buying property is a matter of timing. The best evidence of falling property markets is Japan in the 1990s and the USA in 2007-8. Between 1990 to 2003 Japanese commercial property prices averaged falls of 7-9% per annum for over a decade. These are huge drops. You can't argue that you should 'hold' investments because your yield was improving, as your capital was being grossly undermined. Many Japanese buyers realised this, and sensibly gave their properties back to the banks rather than pay off loans that were larger than the value of their houses.

The biggest determinants of housing prices are:
1. Rising employment - increasing the number of renters becoming landlords (buyers)
2. Rising immigration - increasing demand
3. Rising incomes - increasing the capacity of buyers to buy more & more expensive properties
4. Rising population - increasing demand
5. Regional migration - shifts between regions even within cities
6. Falling interest rates - increases the confidence of buyers, as well as lowering the cost of interest payments
7. Supply constraints - increasing in the Philippines (albeit slowly)

Of course all these factors are part of the total picture giving buyers a lot of confidence, as well as holding off sellers. But the power to expand wealth from property is far greater when you consider the following:
1. The capacity to leverage your property value by borrowing money from a financial institution
2. The capacity to spend on incremental capital works to lift yields on your total investment
3. The capacity to subdivide the lot into smaller lots

All these elements make property a very good investment, and a very lucrative one if your timing is good. Apart from replacing rent, it can also be a great income earner, whether you rent the asset fully, or just a portion (a bedspacer or granny flat).