Impact of Weakening Peso on Philippine Real Estate Market: Peso vs. Dollar 101

How Peso Depreciation Affects the Real Estate Market in the Philippines

There are far-reaching implications when it comes to the depreciation of the Philippine peso, especially in the real estate market. The Bangko Sentral ng Pilipinas explained that the weakening of the Philippine peso is mainly due to the strengthening of the U.S. dollar, and not because of internal economic weaknesses. In this article, let’s talk about the key effects of declining peso value in the real estate sector.

Stronger Purchasing Power for OFWs

With the exchange rate reaching almost Php 60 against the U.S. dollar, the significant effects of potential declines extend to investment decisions and buying power. While this has a huge impact on inflation, this also creates great opportunities for Overseas Filipino Workers and foreign investors as well.

Filipinos who are earning dollars gain significant buying power in real estate, therefore, can expand their investment portfolio and purchase high-value properties at lower rates. This is why the Philippines remains an attractive location for foreign investors, especially in the commercial property and condominium sectors.

Higher Costs for Building Materials

A weakening peso means higher expenses for the construction and development sector. This is because many of the building materials used in property development are imported, hence they are priced in dollars or other foreign currencies. And this results in higher property prices for local investors, while foreign buyers enjoy affordability. However, this can slow down new developments and focus on high-end properties for foreign markets.
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Since a weaker peso can lead to inflation as well as high interest rates, it will become more expensive for local buyers to acquire new properties. In addition, this could lead to a slowdown in property transactions among domestic investors. This economic shift can also limit opportunities for Filipinos to own homes, and even harder to expand local businesses through real estate investments.

More Stable Assets

Despite the economic instability brought by the weakening peso, real estate is still a reliable option against inflation. In terms of market stability and investor confidence, property investments remain an effective way to curb rising prices. Over time, property values go up, so investors benefit from long-term security compared to other asset classes. Real estate remains stable amid currency fluctuations, a valuable investment during tough times.
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Some great locations to invest in properties include Metro Manila, Cebu, Davao, and even Baguio City. Baguio is named the wealthiest city outside the National Capital Region, making it a strategic location for investors. Focusing on cities with booming infrastructure projects and business parks is a good place to start as they offer lucrative opportunities in the long run.

​Final Thoughts

Monitoring the peso-dollar exchange rate is a good habit for many investors because it significantly affects investments and the affordability of properties. Despite the depreciation of the peso, Filipinos can still turn this into an opportunity in the real estate market. If you want to invest in luxury condominiums in Baguio City, feel free to visit REALS.PH website for our exclusive listings of different properties for sale in the Philippines.