IS THE REAL ESTATE MARKET CORRELATED WITH THE STOCK MARKET?

Do stocks and real estate move together? 📈🏡

We plotted the PSEi against Forbes Park land prices (₱/sqm) from 1980 to today, with each president’s term shaded.

What the data suggests:

✅ Over 5-year periods, the two moved in the same direction about 7 times out of 10.

✅ In the big confidence shocks (the 1984 debt crisis, the 1997 Asian crisis, 2008), both fell.

⚠️ Year to year, it’s close to a coin flip. Stock prices react daily, while land prices barely move in an ordinary bad year.

My take: secondary-market prices aren’t transparent here. Owners can’t see a falling market the way investors see the PSEi drop, so there’s little pressure to sell or cut prices. Land prices stay sticky until a real crisis forces them down.

So treat this as a hypothesis, not a rule. 🧐 Our Forbes Park figures before 2015 were compiled from sources JPRE considers reliable, such as studies by reputable firms. They aren’t official transaction records, so read the real estate line as indicative.

On returns: Forbes Park is up 1,444× since 1980 and the PSEi 22×. That doesn’t mean “real estate beats stocks by 65 times.”

It isn’t a reason to put all your money in property instead of stocks. It’s also not proof that you should buy a condo now. Forbes Park is scarce land. A condo is mostly a building, which ages, and new supply keeps coming.

Some other limits:

Forbes Park is the country’s most prime village, not the whole property market.

At the very least, our data suggests prime land has outperformed the stock market over the long run. 🏆

So if the data isn’t perfect, why bother?

Because the long-run link makes sense. When the economy grows, companies earn more and stocks rise. People earn more too, and eventually they buy property. The stock market usually reacts first, and real estate follows more slowly.

That gives us one clue to the question everyone’s asking: when will real estate recover?

The PSEi is still near multi-year lows, and I don’t see a clear catalyst yet. A sustained PSEi recovery would be one sign that confidence is coming back. It’s a CLUE to watch, not a guarantee. 📊

Source: JPRE Research