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    • Ziggurat Realestatecorp
      • 5 days ago
      • 4 min read

    Peso breaches 55:$1, now Asean’s worst performer

    The peso on Monday breached the 55:$1 mark at an intraday weakest of 55.15 against the dollar, raising concerns that the local currency is sliding too fast despite government assurances that it remains stable.


    The last time the peso traded at an intraday low that breached 55:$1 was more than 16 and a half years ago, or since Oct. 25, 2005, at 55.15 to $1, according to Rizal Commercial Banking Corp. chief economist Michael Ricafort. On that day, trading closed at 55.26:$1.


    “Since the start of 2022, the peso’s depreciation of 7.4 percent is now the worst in Asean (Southeast Asian markets),” Ricafort said. The peso started this year at 51 to $1.

    The local currency eventually ended Monday’s trading at 54.78 to a dollar, a gain of 20.5 centavos from 54.985 on June 24.


    After depreciating for eight straight days, Ricafort said the peso closed stronger “as global oil prices recently lingered among one-month lows and the 10-year US Treasury yield lingered among two-week lows.”


    Analysts are worried about the speed that the peso has been depreciating, and that this might come to the point when the Bangko Sentral ng Pilipinas (BSP) would have to use its foreign exchange reserves to arrest the peso’s plunge.


    Emilio Neri Jr., lead economist at Bank of the Philippine Islands, questioned government assertions that the peso was middling among Asian currencies — neither suffering the worst or faring the best, but relatively stable.


    Faster inflation


    “On both a year-on-year (today compared to the same day last year) and a year-to-date (today compared to the start of this year) basis, the peso may soon overtake the South Korean won as the second weakest currency in Asia, with only the Japanese yen left depreciating more than the peso versus the US dollar,” Neri said.


    “Now that we are trading near 55.10, the peso is down by more than 5 percent in about a month… not a very reassuring pace of decline,” he added.


    Neri said such a rate of depreciation for the peso would result in inflation expectations rising farther above the government’s target range of 2 to 4 percent. The latest reading put inflation at 5.4 percent in May.


    Nicholas Mapa, a senior Philippine economist at ING Bank, also warned of faster inflation and a weaker peso ahead, blaming the BSP’s lack of intention to increase interest rates more aggressively.



    Mapa has raised the alarm that the current situation was very much like that in 2018, when the BSP waited too long to increase rates and eventually spent billions of dollars to stop the decline of the peso.


    No need to panic


    But the alarm is not heard at the BSP, where officials maintain that interest rates need not rise in lockstep with US rates.


    They reason that the Philippines and the United States are facing different challenges. For example, inflation in the United States is at a 40-year high at 8.6 percent while inflation in the Philippines remained “manageable” at 5.4 percent.


    “When we look at the rate on a (year-to-date) basis, the average (exchange rate) is at P51.98 (to a dollar),” BSP Deputy Governor Francisco Dakila Jr. said. “This is very much within the DBCC (Development Budget Coordination Committee) assumption of P51-P53 [per dollar] for 2022.”


    Pantheon Macroeconomics seems to share the BSP’s confidence about the peso, saying in a commentary that ample foreign exchange reserves would see the peso through.


    BSP data showed that at the end of May, the country’s gross international reserves were at $103.53 billion, or equivalent to 9.1 months’ worth of imports of goods and payments of services. Such reserves are considered adequate if they can cover the foreign exchange needs for at least three months.


    “Crucially, selling off foreign exchange reserves to lean against overly excessive downward volatility in domestic currencies will remain a big tool in policymakers’ arsenal, and one that still has substantial ammo left,” said Miguel Chanco, Pantheon Macroeconomics’ chief economist on Emerging Asia.


    ‘Currency chaos’


    Still, the United Kingdom-based research firm described the current situation as a “currency chaos,” with “currencies tanking” in emerging Asian economies, including the Philippines.


    “Currencies in Asia have been pummeled in recent months, due in large part to the strong and persistent downward pressure that the post-Ukraine invasion spike in commodity prices has had on trade balances,” Chanco said.


    This was blamed on the inactivity of most central banks in five economies referred to in a commentary—the Philippines, India, Indonesia, Thailand and Vietnam.

    Monetary authorities in the latter three countries have kept their policy rates unchanged while influential counterparts such as the US Federal Reserve have shown increasing aggressiveness with bigger and more frequent hikes.


    The BSP and the Reserve Bank of India have begun policy tightening, with interest rates increases totaling 50 and 90 basis points, respectively. In comparison, the US Fed has raised its policy rate by a total of 150 basis points. (One percentage point is equivalent to 100 basis points.)


    In two policy meetings held last week and in May, the policymaking Monetary Board of the BSP raised the benchmark interest rate for overnight borrowings from banks, twice by 25 points or 0.25 percent. The policy rate is now at 2.5 percent after languishing at a record low of 2 percent from November 2020 to April 2022.


    The much bigger jump in US interest rates has made investors flock to the US debt market, boosting demand for and consequently strengthening the dollar.


    “Not surprisingly then, [emerging market] Asian currencies have been plummeting,” Chanco said.


    Source: Inquirer.net

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    • Ziggurat Realestatecorp
      • Jun 5
      • 2 min read

    Unlicensed brokers are using Facebook to trick unwitting real estate buyers

    Unlicensed brokers are using Facebook to fool people looking to purchase real estate in the Philippines. According to the Philippine Association of Real Estate Boards Inc. (PAREB), these unscrupulous property professionals currently dominate the social media platform’s Marketplace. This is causing a number of issues.


    “Ninety percent of real estate salespersons on Facebook are unlicensed,” PAREB Senior Vice President Jovencio Cainong was quoted as saying by the Philippine News Agency. “The continued operation of colorum agents have resulted in loss of income for the licensed real estate practitioners and poses a high risk for the buyers. “Buyers are at risk of being offered fictitious properties or even with problematic titles if they transact with unlicensed agents.”


    Philippine law prevents unlicensed individuals from offering real estate services to the public. Salespersons must be accredited and transact business under the direct supervision of a duly-licensed real estate broker. However, property seekers, especially ones from overseas looking at real estate using Facebook, may not be aware of this regulation.


    Any person not working under a licensed broker violates the RESA law which is punishable by a PHP100,000 fine, imprisonment or both. Those selling a property without a license are committing a criminal offense.


    Cainong urged the public to conduct due diligence when interacting with a property seller via social media. Meanwhile, the real estate industry is continuing to look for ways to combat the issue of unlicensed brokers.


    Early this year, the Real Estate Brokers Association of the Philippines (REBAP) and Department of Human Settlements and Urban Development (DHSUD) announced plans to monitor and report illicit transactions and fake agents moving forward.


    REBAP was tasked with identifying illegal practices and submitting evidence to a working group under the DHSUD. The association will keep an eye out for all types of real estate scams, including sales and unlicensed, unaccredited or unregistered individuals operating within the industry.


    Once illegal activity has been reported by REBAP, DHSUD will then handle the coordination of legal proceedings and apprehension through authorized agencies if applicable.


    Source: PNA

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    • Ziggurat Realestatecorp
      • Apr 28
      • 4 min read

    The science of dating and house-hunting

    How many dates do you need to go on before finding the right partner? Luckily (or not-so-luckily for some), mathematics can shed some light on just the right number of dates a person needs to go on before they should stop and commit.


    There is a popular “optimal stopping” solution in the field of decision science, widely known as Rule 37%. Rule 37% says that in order to find Mr. or Miss Right, you should settle down with the next best person you go out with after dating 37% of the potential candidates in your lifetime.


    Assuming an average Joe gets to go out on a date with 20 different candidates in his lifetime, Rule 37% says he should date at least seven people (37% of 20) and reject them, before settling down with the next best person he dates.


    This maximizes his probability of finding that dream partner. For the more mathematically inclined, you can read more about the optimal stopping theory, also known as the secretary problem.


    Settling down is no laughing matter. Arguably the only thing that beats getting hitched on the priority scale is buying a home. Fret not, for decision science solutions such as Rule 37% can be applied to a broad range of problems, including buying property.


    Just following your heart may not always be right


    How often have we been told to “go with your gut feeling” or “just follow your heart” when it comes to choosing a home? Counterintuitively, investing in million-dollar properties can still be a snap decision for many. First-day sales of new launches tend to yield better results than later-day sales, driven partially by herd mentality. Science provides a solution.


    Suppose you have three months to buy a house (excluding another two months to sort out the paperwork to complete the sale) and you are only available to view the potential properties on weekends. If there are 12 weekends or 24 Saturdays and Sundays in three months, Rule 37% says you need to spend at least nine Saturdays and Sundays (37% of 24 days) viewing, assuming you view an equal number of properties each day.


    Try to not commit to any of the places you see in these first nine days, unless the property is an exceptionally good deal. This step ensures you build up sufficient understanding of the types of property that might be suitable for you, such as the layout, facilities and level of furnishings.


    From the 10th day onwards, get ready to buy the unit that is better than all the places you saw in the first nine days. Say, for example, on the 12th day of viewing, you find a place that is better than all the other places you have seen. Committing to it will be your optimal decision.


    This process gives you the greatest chance of sealing the best deal without having to physically view all the available ones in the market, which would be a dreadful task given the time constraints. You also cut the risk of committing too early to a place you may eventually regret buying.

    Strictly speaking, one of the key conditions of Rule 37% is that you can never revisit the properties you have viewed. However, this only applies in a fast-moving market or if the sample size is large; otherwise, you may not find a better property after rejecting those you have viewed. If the sample size is small, one can simply refrain from committing to the first 37% properties viewed.


    The first 37% of the properties viewed serves to build your understanding of your personal preference


    What’s the right price?


    Nicholas Sparks, author of The Notebook, once wrote: “There’s no love like the first.” Inevitably, we tend to compare many of our life relationships to the first, regardless of whether or not it ended well. There is an aura of mystique to being the first.

    In decision science, there is a term for this cognitive bias — anchoring. Anchoring is our tendency to rely too much on the first piece of information we received when making decisions. In real estate, this problem rears its head in its most important element — pricing.


    Gregory B Northcraft and Margaret A Neale, professors from the University of Arizona in the US, conducted an experiment on real estate pricing and found that even professionals were affected by anchoring bias.


    In the experiment, a group of real estate agents were each given a package containing information on a selected property, such as listing price, floor area, photos, layout and a summary of sales transactions in the neighborhood for the past six months. The only item that was different was the listing price.


    Each participant received one of these four listing prices: a) US$119,900, b) US$129,900, c) US$139,900 and d) US$149,900. Participants were also brought to the property for a physical inspection and were then asked to provide a valuation of the property.


    Surprisingly, estimates varied widely and were heavily influenced by the listing price. For example, agents who received the lowest listing price of $119,900 submitted conservative valuations of $114,204 on average.


    On the other hand, agents who were given the highest listing price of $149,900 submitted bullish valuations averaging $128,754, despite being given the same information on the subject property, less the price.


    Science as a solution


    As players in the property scene, being aware of inherent problems and potential solutions is critical to helping you gain a competitive advantage. An understanding of simple decision science theories can provide practical rule-of-thumb solutions.


    Source: EdgeProp

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