Property buyers shift gaze away from Metro Manila

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By Jochebed B. Gonzales
Senior Researcher

CONSUMER home buying sentiment in the Philippines improved last quarter, boosted by households’ increasing optimism over properties located in areas outside the National Capital Region (NCR).

Results from the Bangko Sentral ng Pilipinas’ (BSP) Consumer Expectations Survey showed that 40.6% of households considered last quarter was a “good time to buy” house and lot, improving from 37.5% in the third quarter of 2017 and 36.7% in last three months of 2016.

Property Purchase

The share of households who intend to buy at least one property for the 12-months forward also picked up to 11.2% from 9.8% during the preceding quarter and 9.5% in the fourth quarter of 2016.

Higher optimism was seen for areas outside Metro Manila where 41.2% of the households surveyed thought last quarter could have been an opportune time for buying real estate in these places, from 36.5% and 37.2%, for third quarter last year and fourth quarter of 2016.

The percentage of households which expressed intent of buying properties outside NCR during the next 12 months rose to 11.6% from 9.7% in the third quarter and 10.1% during 2016’s comparable three months.

In Metro Manila, however, outlook dampened as share of households who are optimistic about purchasing properties slipped to 36.5% from 43.8% in the third quarter. The percentage of those who plan to buy within this year also declined to 8.5% of households from 10% previously.

“From the usual central business districts, we see more of developments moving outside due to various reasons,” said Union Bank of the Philippines chief economist Ruben Carlo O. Asuncion.

“One is the increasing prices of properties at the centers. Although house and lot prices are actually stable, it is the vertical developments that are rising. I think, this is a probable reason why sentiment for buying has weakened in Metro Manila as the survey describes.”

“Another reason that supports the spilling out of Metro Manila is the push for more infrastructure projects that seek to decongest Metro Manila. Major real estate developers, including the second tier ones, are more aggressive of focusing outside of Metro Manila because of its higher potential and positioning reasons,” he added.

For Security Bank Corp. economist Angelo B. Taningco, weaker buying sentiment among Metro Manila households was due to steeper prices both in consumer items and real estate.

“Prospects of higher consumer price inflation and property prices in NCR this year may have turned consumers less optimistic in purchasing properties within this region, and bolstering their sentiment of buying real estate outside NCR. I agree with this sentiment by consumers,” Mr. Taningco said.

“I think the accelerating pace of property development and public infrastructure development in areas outside NCR are boosting consumer sentiment in buying house and lot outside NCR,” he added.

Jose R. Soberano III, chairman and chief executive officer of Visayas-based Cebu Landmasters, Inc., said: “A lot of these buyers are also based in Metro Manila and interested residents — those looking outside [NCR] or [those who want to] go back home.”

“Gradually, Visayas and Mindanao have been able to create their market niche. Metropolitan cities like Cebu, Davao, Bacolod, Cagayan de Oro, Iloilo or even Dumaguete created employment-generating centers catering to the BPO sector for example.”

But for SM Development Corp.’s Executive Vice-President Jose Mari H. Banzon, Metro Manila still tops the sales for the Sy-led property developer.

“Our sales of residential properties in the NCR region continue to be strong. We’ve observed strong interest from both end-users and investors. The NCR continues to be our biggest market.”

Asked who these end-users were, Mr. Banzon said: “Various. Start-up families, young executives, entrepreneurs [and] OFW (overseas Filipino workers) professionals.”

According to the BSP survey, households which received OFW remittances last quarter allotted 14.2% of the remittance for “purchase of house.”