The Philippines is an amazing place to live. The southeast Asian country is one of the biggest archipelagos in the world, with over 7000 islands which means it’s blessed with a plethora of beaches. With a beautiful environment and low cost of living, this is a fun place to live. So, how much is the average house in the Philippines?
The average cost of a house in the Philippines is between $124.07 and $214.67 depending on location and other factors. There is a limitation on foreigners owning lands, but they can still own properties through condo purchase, long-term lease, marrying a native, or buying through a corporation.
Beyond the basic sale price, buyers still have to pay fees and taxes on the purchase. Here, we discuss the cost of a house in the Philippines and what you should know about buying a house here.
Cost of House in the Philippines
The cost of homes in the Philippines varies based on several factors, just like in other places. Such factors as age, size, location and several others will generally affect how much you pay for homes in this country. The average cost in the city center is 11,061.95 Philippines pesos per square foot, equivalent to $214.67. it’s much lower outside the city center, with the average price per square foot being $124.07. This means that a house of 1000 square feet will cost $214 670 in the city area, but the same will go for 6,393.33 Philippines pesos which is equivalent to $124.070 outside the city.
Most houses in the country have a floor area between 312 square feet to 527 square feet. However, the lot size is usually much bigger, with the average being between 861 square feet to 1,292 square feet. The most expensive places to get a house in the Philippines are the cities or popular tourist areas with a large expat population. These places include Manila, Makati, Quezon City, Davao City, Tagaytay, Dumaguete, etc. The high cost of homes in these areas is mostly due to the demand. But anyone planning to live in these areas usually has to deal with high population density, congestion, and traffic. This is especially true for Manila.
Limitations on Foreigner’s Land Ownership
The first thing you need to know as a foreigner who wants to buy property in the Philippines is that foreigners are prohibited from owning land. however, it’s still possible to own a residence through various means such as:
1. Buy A Condominium
The Philippines Condominium Act permits foreigners to own condo units as long as Filipinos own 60% of the building units. With a condo, you only own your unit and not the land it sits on.
2. Long-Term Lease
You can always enter a long-term lease agreement with a Filipino landowner if you want to own a house. The law that prevents foreigners from owning land doesn’t cover houses which means a person can own the house but not the land it sits on. In that case, you’ll have to lease the land. The Investor’s Lease Act of the Philippines allows foreign nationals to enter a lease agreement with native landowners for a long-term lease that can last for up to 50 years initially and a one-time option to extend for 25 years.
3. Buy Through a Corporation
Another option is to buy a house through a corporation, but at least 60% of ownership in the corporation must belong to Filipino citizens. The corporation must also be registered with the Philippines Board of Investment to have the right to be involved in a real estate transaction in any capacity at all.
4. Marry A Filipino
Foreigners who marry Filipino citizens can also buy property in the country. The property will be in the spouse’s name since a foreigner can’t own land. You can add your name to the contract to buy the property. The property doesn’t transfer to you in case of your spouse’s demise or divorce. But you’ll have reasonable time to sell the property. If you don’t sell within that period, the property will pass to the spouse’s relative or heirs.
Regardless of how you choose to buy a property, a foreigner can’t own more than 10,764 square feet of urban land, about a quarter of an acre or one hectare of rural land.
Another important thing to note when buying property in the Philippines is the additional fees attached to the purchase cost. There are usually several fees to pay in the Philippines, such as:
1. Documentary Stamp Tax
This is 1.5% of the cost of the property, fair market value, or zonal value, depending on which is highest.
2. Transfer Tax
This is between 0.5% to 0.75% of the cost of the property, which is fair market value or zonal value. The property’s location will determine the percentage you’ll pay, but it’s always the highest.
3. Capital Gains Tax
The seller is supposed to pay this tax, which is 6% of the property’s sale price, fair market value, or zonal value, depending on which is highest. But there are times when the buyer might have to pay it, or the seller will include it as part of the cost.
4. Title Registration Fee
A published registration fee table determines how much you have to pay. It’s usually around 0.25% of the cost.
Should You Buy House in the Philippines
While the country has a booming tourist scene, not every foreigner here is a tourist. There’s a large community of expatriates here too who enjoy its low cost of living, tropical climate, beautiful environment, etc. Thus, there are several benefits to living here. But the country also has its issues, such as a high crime rate and civil unrest, which may put a foreigner in danger. However, location is quite important, and it’s important to choose the safest areas in the country.
The cost of homes in the Philippines varies based on several factors, but it’s still more affordable than in the US. Of course, you can’t own land as a foreigner, making it challenging to buy property there. But if you want, it’s important to work with experienced local real estate agents and attorneys and visit the house physically before buying it.