When it comes to the housing market in Metro Manila, one of the typical decisions you’ll need to make is whether renting or owning is the best move for you.

Both options have their own advantages and disadvantages, and choosing the right path requires careful consideration of your financial situation, lifestyle, and long-term goals.

For some people, owning a property in Metro Manila is the equivalent of the mental stress of borrowing millions to pay for a condo or house, and slaving their years away just to pay for it. Whereas renting allows them to live their life more freely without the financial burden of home ownership.

However, there are those who see the positive long-term effects of being a homeowner. Their perspective is that owning a house can provide leverage, especially during life uncertainties such as losing a job, failing health, or economic downturn, because they still have roofs over their head. They’ve got a basic need covered, and it can’t just be taken away in a snap.

In this blog post, we’ll explore the pros and cons of renting and owning in Metro Manila to help you determine which is better for you.

Renting vs. Buying: Points to Consider

Making the decision to rent or buy a home is a crucial step on your journey toward finding your perfect abode.

We’re here to explore key points that can help you navigate this decision, ensuring you make a choice that aligns with your individual situation.

Point #1 ­– Lifestyle

One of the first considerations when deciding whether to rent or buy is your lifestyle. Someone who does a lot of traveling, personally or professionally, or has plans to relocate or migrate in years’ time, could be of no use in buying their own house. On the other hand, for someone who wants to plant their roots in a particular area and is looking for stability, buying could be the way to go.

This factor has never been more obvious in the era of hybrid work. Before it became the norm, most people who worked in the city found it better to rent closer to their workplace to avoid the long commutes day and night (Manila traffic can be a nightmare!).

However, nowadays, the same amount one pays to rent in the city can be used to finance living in the suburbs through the purchase of a house as well as a car and enjoy having more space to accommodate their WFH profession and other interests.

Point #2 ­– Financial factors

Your financial situation plays a crucial role in determining whether to rent or buy a home. Consider your income, expenses, savings, and future financial projections before making a decision. Understanding your financial capacity and risk appetite will help you determine what is financially feasible for you in the short and long term.

If your profession is permanent and your salary permits you to afford a home loan, or if you’ve saved up enough for a cash payment, then it makes sense to start taking steps to own a property.

As a good rule of thumb, when buying a home in Manila, you might want to practice what most major banks in the Philippines prefer. That is having an average debt-to-income ratio (DTI) of 30% or less. With this method, no more than 30 percent of your gross monthly income should be allocated to all of your debt, including your mortgage and other obligations like a car loan and credit card payments.

If you can comfortably live enough after debts and expenses then you could well be on your way to saying yes to a long-term commitment of home ownership.

Point #3 ­– Current market conditions

Comparing the costs associated with renting and owning in Manila is crucial in making an informed decision. Take a close look at the demand, property prices, and rental rates in your desired area.

If the market is experiencing low demand and bargain selling prices, the time to pull the trigger in homeownership might be more beneficial for the long term, especially if you have been putting it off for a while. Over time, rental prices generally tend to increase. By purchasing a property when prices are low, you can strategically build equity as your capital appreciates.

On the other hand, if it’s a hot market with more potential buyers than there are available properties, then renting for the meantime might be the better option until the market cools off or until you find the perfect home to purchase at a fair price.

Point #4 – Long-term goals

Another crucial factor to consider is your long-term goals. Are you purchasing property solely for personal use or are you also considering investment potential? Many homeowners choose to invest in properties for rental income in addition to personal use. If generating rental income is part of your long-term plan, buying a property with good investment potential might be a wise choice.

So, when is renting such a good idea? And when is it not?

Below we will delve into the pros and cons of renting vs. owning a property in Manila.

The Case for Renting

Renting a property in the Philippines offers a range of benefits that may make it the right choice for your current circumstances. Here are a few reasons why renting might be a good option for you:

PROs

✅ Flexibility

Renting provides the flexibility to move to a different location or upscale/downsize to your heart’s desire. It allows you to move easily when opportunity strikes, without being tied down to a single place.

This is particularly appealing if you are uncertain about your long-term plans or if your job requires frequent relocation.

✅ Lower upfront costs

Renting generally requires a smaller upfront payment compared to owning a property. You’ll typically need to pay a security deposit and possibly one or two months’ worth of rent. This can be advantageous if you don’t have a large amount of savings for a down payment to purchase a property.

✅ Limited responsibility for maintenance

As a tenant, you are not solely responsible for repairs and maintenance of the property. If something breaks or needs fixing, it’s the landlord’s responsibility to address especially when it comes to major repairs. This can save you money and the hassle of dealing with maintenance issues.

✅ Access to amenities

Many rental properties in Metro Manila offer access to amenities such as swimming pools, gyms, and 24-hour security. These amenities can enhance your lifestyle without the additional cost and effort of owning them yourself.

By gaining access, you also gain perspective on what kind of space works for your and/or your family’s needs. Renting allows you to fully test the property and the community so you can own a home eventually with no regrets.

For example, we’ve seen plenty of expats and locals rent in upscale CBDs like Makati or Ortigas for a few good years. After some time decided to try a change scenery by moving into a different CBD like Bonifacio Global City or Alabang and ended up liking it more as it suited their lifestyle better and the properties were solid investment opportunities.

But of course, despite these advantages, renting also has its downsides. Let’s take a closer look at the potential drawbacks:

CONs

👎 Limited control

As a tenant, you have limited control over the property. You may not be allowed to make significant changes or personalize the space according to your preferences. This lack of control can be frustrating for those who want to customize and make a space their own.

👎 Rent increases

Rent prices in Metro Manila can be subject to fluctuations and occasional increases. This lack of stability can make long-term financial planning more challenging, especially if you’re on a fixed budget.

👎 No equity buildup

When you rent, your monthly payments go towards paying for someone else’s investment. Unlike homeowners, you won’t build equity in the property over time, and your monthly rent payments may feel like money down the drain.

That said, considering the various factors, renting a property can often be a practical choice depending on the circumstances. It’s a good option for people who are still exploring the homes fit for their goals and needs, while still building their financial foundation and maintaining freedom and flexibility.

While renting has its advantages, owning a home also presents a compelling case for aspiring homeowners in Manila. Owning a property allows you to establish your grounds and potentially improve your life in the long run.

Let’s explore the case for homeownership in Metro Manila.

The Case for Owning

Owning a residential property in the Philippines has long been seen as a symbol of stability and financial security. Here are some reasons why owning might be the right choice for you:

PROs

✅ Investment potential

If you make smart real estate investments, property ownership can be a lucrative long-term investment. Property values in Metro Manila have historically shown consistent appreciation, allowing homeowners to build equity and potentially profit from their investments.

✅ Pride of ownership

Owning a home allows you to take pride in your property. You have the freedom to customize and personalize your living space to suit your taste and lifestyle. Plus, the sense of security and stability that comes with homeownership can be emotionally rewarding.

Further, having a permanent residence allows you to forge lasting relationships within your community. This can be a good source of support and a sense of comfort in your life.

✅ Fixed monthly expenses

With a fixed-rate mortgage, your monthly housing expenses can be more predictable compared to renting, where rent demand and prices can fluctuate. This predictability can facilitate better financial planning and make it easier to budget for other expenses.

✅ Financial strength

Homeownership in the Philippines can strengthen your financial portfolio. Having a tangible asset that is stable and generally holds its value like real estate can be an appealing choice for collateral security, as most lenders are more willing to accept it vs. non-tangible assets.

There are many ways you can benefit from having access to loans such as capital to fund your business or to buy another property.

However, homeownership also has its downsides. Here are a few factors to consider:

CONs

👎 Financial commitment

Owning a property requires a significant financial commitment. In addition to a down payment, you’ll need to consider mortgage payments, property taxes, insurance, village/ condominium association dues, and maintenance costs. It’s important to make sure you have a stable income and a thorough understanding of your financial obligations before taking the leap into homeownership.

👎 Maintenance responsibility

Unlike renting, homeowners are responsible for all repairs and maintenance of their property. This includes everything from routine maintenance to major repairs, which can be time-consuming and costly, and in some cases can leave you feeling overwhelmed.

👎 Less flexibility

Owning a property can limit your flexibility to move to a different location. Selling a property takes time and may involve additional costs, such as repairs and agent fees. If you anticipate frequent relocations or have a dynamic lifestyle, renting might be a more suitable option.

After some serious thought, owning a home might be a great choice for those who are after security, especially when their other life prospects such as career and family are on a stable trajectory.  

🔗 RELATED: 5 Important Things to Look Out for When Buying a Property

Final Thoughts

In conclusion, the decision between renting and owning in Metro Manila is a personal one that depends on your individual circumstances and preferences. Renting offers flexibility and lower upfront costs, while homeownership provides investment potential and a sense of stability. By weighing the pros and cons of each option and considering your long-term goals, you can make an informed decision that aligns with your lifestyle and financial aspirations.

Since the real estate market in the Philippines is dynamic, what may be the best option for you now may not be the best choice in the future. Keep yourself informed about market trends, consult professionals, and regularly reassess your housing needs and goals to ensure you’re making the right decision for yourself and your future.

In the end, you have the ability to choose the option that improves the quality of your life overall. Renting could be the better financial option, but owning a house is grounded in our emotions, and sometimes it’s hard to put a price on that.