Increasing Costs
For today’s Guest Column, we have another contribution from Vicki Indiati. Thanks, Vicki for your contribution!
I know Bob touched in this a short while back but I thought I’d enumerate somewhat more with examples of just how expensive this country has gotten just in two years. This has caused tremendous financial pain to American expatriates in particular but also to OFW families as has been well documented in the papers as of late. Even Europeans are starting to complain. Seems the only group I can tell that are acting immune to it all are the Koreans who are buying up property to build their retirement villages in choice places around the country.
House Construction
In September 2005 the peso was about 56 to the dollar. At that time, the cost to build a quality turn key house here in Dumaguete by a very high quality builder was about P14,000 sqm. So a 350 sqm house would have been about 5,000,000 peso and at 55 pesos to the dollar about $89,000 USD.
Today, January 2008 the peso is 41.00 to the dollar and the cost to build that very same house using the same builder, given the labor and materials price increases over the past 2 years now puts the house at 20,000 per sqm. So the same 350sqm house would cost 7,000,000 pesos and at 41.00 to the dollar would be $171,000 USD. Can you imagine that ALMOST DOUBLE!!!
Now don’t get me wrong, My grandmother lives in a nothing spectacular 50 sqm condo in Aventura Florida that is valued at $220,000 so even if you factor in the land cost for the house you would build here for $171,000 it is probably about the same. So you are still getting a lot more here.
It is expected the peso will yet climb to 38 to the dollar within six months so I would suspect the building cost would be closer to perhaps 22,000 a sqm and that would put it at 7,700,000 or $202,000
US freakin Dollars. Are you hearing this. WOW an 18% percent increase in just 6 months using this scenario.
The thing that irritates me most is how in the world prices in the Philippines have gone up so much, especially on imported stuff from the states. Yes, I understand that prices have risen in the USA as well but, due to the 29% increase in the peso vs. the dollar those price increases should have been mostly neutralized and if anything prices here should have remained unchanged. Oh, get this….a kilo of boneless chicken breast was P120 two years ago and now it is P170 a 42% increase just in the peso price on a domestic product. So in dollars it went from 97 cents per pound to $1.86 a pound. Imagine that, almost two bucks for a pound of chicken a 91% price increase for me factoring in the dollar depreciation. They (and I) may be switching to dog pretty soon ha ha ha. I never thought I’d be saying this for at least more 10 years from when I first moved here, but believe it or not it is already in two short years real expensive to live here now. Many American retirees trying to live on $1,000 a month now which was very doable before are now endangered and possibly an extinct species. In fact many of them are actually moving back to the states while many others are seeking other places to go. Some are looking at Argentina, Panama, Cost Rica and other parts of South and Central America. Problem there and everywhere else is the language which is still the biggest advantage of being here in the Philippines. English is widely spoken. BTW, gas here is $4.22 a gallon and diesel is $3.82. Oh well.
[...] Here’s another interesting post I read today by Bob [...]
I hope you become a regular writer on this web magazine. Your articles are interesting, factual and to the point. Good job!
Hi Bob (HI) - I agree!
Your articles very enteresting I hope you write more articles.
Hi Vicki,
I’m an American living in the States with my Filipina wife. Before she went home for a visit the last time she asked me to help her choose a digital camera for a friend, who could afford $150. I asked why her friend just didn’t buy the camera there, as I thought they should be cheaper when purchased so much closer to where they are actually manufactured. She convinced me that on many items, the prices here in the states are cheaper. Shipping costs weren’t considered since it was going in my wife’s luggage.
Does the above scenario apply primarily to luxury items like cameras, or does this strange (to me) phenomena apply to other categories as well? Even if it’s only true for luxury items, it doesn’t compute for me! There are a lot of miles and several value added middlemen adding costs to something manufactured in, say, Melasia, shipped to a store in the US, and finally shipped back to the Philippines.
There’s something wrong with this picture!
Can you make sense of this for me?
Thanks,
–James
Hi James - On digital cameras, your wife is very right. I have seen digicams that are available in the States for $199 that go for as much as $700 here! Amazing, isn’t it?
Hi Bob,
It may or may not be “amazing”, depending on how the difference of $500 is being distributed. This is what I want to know!
–James
Interesting… Noone here. Moving to another thread…
Hey vicky At that price i will sell u my home in the pines for 400,000 pesos ..Talasay area by gingoog city …. very cheap compared to the prices u have mentioned… just joking ..as i mentioned in a earlier blog i built my houes for about 1000 pesos a sqm … and my wife supervised the building …
Oh i forgot to say when i am in the pines we live on about 100 usd a week ..and some extra for sigthseeing ..that pays for electric and the boys schooling , food and other things ..so i belive i can live real good on my retirement ..
if you live out in the province its alot cheaper then the city.and the philippines is just like the usa you have to learn where and when to shop for things and not go crazy spending your money! it depends on your lifestyle if you already built your home and its paid for ,all you have is to pay for your food and utilitys!you can install a satelite dish and only pay 20 bucks or so a month .movies are cheap hair cuts are cheap, jeepneys are cheap a motorcyle or trike is cheap, if your out in the province vegies are fresh and cheap! if your near the beach fishing is free or fish can be cheap, dry fish is cheap to eat rice is more exspensive now but stretches a long way pasta is cheap my realatives have many different fruit trees ! and private school for children is very cheap compared to the usa ! the philippines is still a bargain in my eyes if you have a steady income you can depend on ! you just need to be disciplined with your money it still stretches far!!!!!!!!
Hi Mike - costs of the exact items that you mention have risen dramatically in the past year or so. Living in the Philippines is not nearly the same as it was just a year ago.