Q&A: How Much Do I Need to Build a House?

It is good to know how much money you need to build a house to best ensure there are no delays in the project and that the property indeed serves as a worthwhile asset

While fully built homes are preferred by most buyers because they are mostly ready for occupancy and come with no additional construction costs, others still favor building a new home from the ground up. The common motivation behind this is the chance to establish a true dream home, where every aspect of the property is exactly how the owner wants it.

It is, however, something that is easier said than done, and apart from the logistics of building a home from scratch, there is also the matter of financing the project. From hiring a contractor, securing the needed permits, to purchasing building materials, there are a number of things an owner has to spend on, and it is important that these are accounted for, to ensure you incur no extra or unnecessary expense when you decide to build a house.

Q: How Much Do I Need to Build a House?

A: According to the 2016 Construction Cost Handbook of construction consultancy services provider Langdon & Seah Philippines Inc., the cost of building a house still varies depending on the type and size. Terraced houses and average standard homes (one to two bedrooms) tend to cost between Php25,700 and Php31,000 per square meter. For detached houses and high-end residences, on the other hand, the cost is between Php53,900 and Php63,150 per square meter. These values, as per Langdon & Seah, are already inclusive of the expenses for mechanical, electrical, and plumbing services.

Q: What Permits and Paperwork Do I Need to Build a House?

A: Along with the materials and labor needed for building a home, there are also a number of permits and paperwork which you also need to produce for your project to push through. According to Eric Madrinan, a civil engineer in the business of building and selling properties, these permits include the following:

  • Architectural Plan – a plan that will be used as a reference in the construction of the house. This is provided by your chosen contractor.
  • Barangay Permit – a permit from the barangay that has jurisdiction over the area you’ve chosen, and which you will also need your neighbors to sign.
  • Building Permit – Once you’ve secured the Barangay Permit, you will present it to the city hall together with the Architectural Plan to secure the Building Permit, which is needed for you to start to build a house.
  • Occupancy Permit – When construction is finished, you’ll also need to secure an Occupancy Permit, which are documents that signify that a licensed building surveyor is satisfied with the completed building work and that the new home is indeed suitable for occupation.

Q: Can I Use the Building Plan to Establish a Budget?

A: For a more specific idea of how much building a house will cost, you can look to the final plan and designs you establish for the project. This is due to the costs also depending on the following variables, on top of the previously mentioned price range per total floor area:

  • Type of finish – Standard to elegant. According to Mr. Madrinan, a standard finish can cost about Php14,000 or more, while an elegant finish costs upward of Php30,000.
  • Timetable – Construction done in a rush would typically require more manpower than what is commonly needed to meet the shortened construction timetable
  • Lot location – If the location of your lot is lower than the road and would require the land to be filled, then this would expectedly be an addition to the cost.

Using the Budget to Make a Plan, Which Results in a More Specific Budget

In the instance, however, that you already have money set aside and know exactly how much you can spend on building a new house, it may be better to provide your budget outright to your contractor or architect. Just make sure that the one you select is duly licensed, and has a commendable track record of building homes that are of quality and within the specifications of the Philippines’ Building Code.

With what you can spend in mind, your house plans are designed and drawn, the technical specifications and bill of materials are prepared, and the final project cost is reached. When all parties are in agreement regarding every detail, a construction contract is executed and the previously mentioned building permits are secured. The construction phase begins shortly thereafter.

Q: Can I Build a House for 150k?

A: You might not be able to get much for that amount in Metro Manila, but if you’re willing to settle down in the farthest provinces in the Philippines, it’s possible to build a simple house for Php 150,000. This is especially manageable if you can find affordable labor and if you already have a piece of residential land to your name. Tiny houses that are less than 11 square meters are quite popular these days. You may take inspiration from these types of houses to successfully design a home with a budget of Php 150,000. 

Q: What Is the Cheapest Type of House to Build?

A: The cheapest type of house to build would be a standard nipa hut or Bahay Kubo. The physical structure of the house itself, including materials and labor, can hover around Php 20,000. When you factor in the cost of building permits, land, building plans, and any additional expenditures, all in all, you can expect a grand total of about Php 80,000 or more, depending on the property’s location and size. 

Q: What Is the Most Expensive Part of Building a House?

A: The most expensive part of building a house is framing. Standard components of framing include the floor, ceiling, roof, and walls. The frame of a house is essentially its skeleton, so it needs to have the correct dimensions and appropriate shape. Otherwise, the house will be structurally unsound and you can’t move forward with the build. 

Framing costs depend on labor, property size, and materials used during construction. It’s one of the most exhaustive parts of building a house and the one with the most components to oversee, so a skilled carpenter is also needed to properly plan and manage the construction process.

For a small 54 sqm two-story house, roof framing can already amount to Php 300,000, while the total cost of framing for both the ground floor and second-floor foundations (including lintel beams and stiffener columns) is anywhere between Php 250,000 to Php 300,000. 

Q: Can I Get a Loan to Build a House?

A: Yes, there are plenty of ways for you to get a loan to build a house. Most banks these days offer housing loans with an average interest rate of 5% and a minimum loan amount upwards of Php 200,000. There’s also the Pag-IBIG fund which has a short-term multi-purpose loan for minor home improvements and several housing loan programs for its members. 

The standard Pag-IBIG housing loan has a maximum loan amount of Php 6,000,000 and interest rates as low as 5.5% per annum. For minimum wage earners, there’s the Affordable Housing Loan Program, which offers interest rates as low as 4.5% per annum, depending on your monthly salary and place of residence.

These housing loans can be used for constructing a new home, purchasing a residential property, making home improvements, or even refinancing an existing home loan.

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