Manila and Cebu Are Among the Most Unaffordable Cities in the World to Buy a Home

(SPOT.ph) To buy a house or not to buy a house? For anyone in or entering adulthood, this is a question you’ll probably ask yourself at one point. Unfortunately for us, it is pricier to buy a house in the Philippines than in most other places in the world—relative to our income, at least.

In the Property Prices Index by Numbeo, two urban centers in the Philippines landed in the top 10 most unaffordable cities for buying a home. Manila is ranked third, just behind Colombo (Sri Lanka) and Kathmandu (Nepal), while Cebu City takes the sixth spot.

Instead of a direct comparison of property price tags, this ranking compares real estate costs relative to local household earnings. In short, buying an apartment in Manila or Cebu is far harder on a Filipino salary than it is for residents of Tokyo, New York, or London.

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To rank global cities, the index compares the median price of a standard 90-square-meter apartment with the median family income. For context, Numbeo lists the average after-tax salary at P30,160 in Manila and P22,884 in Cebu.

The final score shows how many years it would take a household to buy a home: 35.9 years for Manila and 33.7 years for Cebu—and that’s assuming the household puts its entire income toward the purchase.

If those numbers sound impossibly bleak, note that the index uses a 90-square-meter standard to define a “home,” which is actually a pretty residence by Philippine standards. Many first-time homebuyers in the Metro get their first taste of owning property with much smaller units, some even starting at around 22 square meters.

Also read: 10 Most Expensive Condominiums in Metro Manila

Numbeo’s global data also looked at how affordable mortgage payments are based on a city’s median income. Basically, if a household took out a 20-year mortgage covering 100% of a property’s price, how much of their income would go to monthly payments?

Manila ranked 16th in the world, with monthly mortgage costs estimated at 344.4% of a typical family’s take-home pay. Cebu is not far behind at 313.1%

Again, this uses the same 90-square-meter standard, so it may not reflect the size of the first home many Filipinos actually buy. Still, it shows how wide the gap is between property prices and regular pay in the Philippines. Many aspiring homeowners have to rely on bank financing alternatives, large equity down payments, or external income sources. 

That’s where financing options like housing loans usually come in. This June, PAG-IBIG raised its maximum housing loan limit from P6 million to P10 million per borrower. This adjustment aims to assist middle-income and higher-earning workers seeking long-term financing for properties in highly urbanized centers like Metro Manila.

“This is the value we want to give our members: instead of paying rent month after month, they can use their hard-earned income to pay for a home they can eventually call their own,” Pag-IBIG Fund CEO Marilene Acosta said in a statement.

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