With the feverish rate of construction of condominium units all over Metro Manila and to a more limited degree in other urban areas like Metro Cebu, the question of the possibility of a real-estate bubble is now more frequently asked. It is difficult to give an answer without an accurate estimate of the potential supply and the approximate demand for these units over the next three to five years, the average construction period.
Analysts may be one in declaring that the Philippines is safe from a real estate bubble just yet. One expert, however, did urge the public to keep a close eye on reliable indicators. Enrique Soriano, Ateneo program director for real estate and senior adviser for Wong+Bernstein Business Advisory, advised that the country shouldn’t let its guard down.
Will a crash follow the surge? Are we in a bubble that’s about to burst? A real estate bubble occurs when values begin to increase and reach a point where they outstrip the collective incomes of potential buyers. This causes drastic stalls in lending and sends values spiraling downward.
