By Melissa Luz T. Lopez, Senior Reporter

Real estate price growth slows

Posted on April 03, 2017

HOUSING PRICES stood barely changed by the end of 2016, with lower costs tallied within Metro Manila against minimal upticks recorded in the provinces during the fourth quarter, latest data from the Bangko Sentral ng Pilipinas (BSP) showed.

Residential property prices went up by a mere 0.3% between October and December 2016 from a year ago, which is the slowest pace ever seen under the central bank’s residential real estate price index (RREPI). The rate slowed down from a 2.2% increase in the third quarter and a 5.2% uptick during the comparable year-ago period, and is the slowest since the earliest available data from the second quarter of 2015.

The RREPI is the BSP’s tool that measures the average change in the home prices across building types and locations, allowing regulators to assess overall real estate and market conditions and monitor any looming bubbles in the property sector.

It was cheaper to acquire housing units within Metro Manila during the last three months of 2016 with average prices down by 1.1% from the previous year, edging lower than a 0.2% decline posted during the third quarter.

This was partially offset by a 1.7% increase in the cost to acquire homes in the provinces, even as it also slowed down from a 4.9% rise logged during the third quarter.

By structure type, duplex units sustained a drop in prices for the second straight quarter as it slipped by 12.3%, coming from a 5.1% decline seen during the July-September period and a 5.8% slide during the last three months of 2015.

Duplex prices dropped by 8.8% within Metro Manila, against a 5.5% rise recorded in other regions, according to BSP data.

Price tags on single detached and attached houses also went down by 1% from a year ago, reversing from a 2.4% increase in the third quarter and an 8.2% jump seen during the comparable period in 2015 as prices within Metro Manila and the provinces dropped by 8.6% and 0.2%, respectively.

Meanwhile, rates for townhouses rose by 6.2% nationwide, led by a 16.3% jump in the provinces where it is considered as the most popular option, the BSP said in a statement. Townhouse prices stood steady within Metro Manila, clocking in a mere 0.1% increase from the past year.

Condominium units also saw a small increase in prices by 1.8%. It posted a mere 1.3% climb in Metro Manila -- where it is the most common purchase -- against a 6.4% jump in rates outside the capital.

BSP Deputy Governor Diwa C. Guinigundo said the movements in housing prices largely reflected growing demand, allaying fears that a property bubble is in the offing.

“There is a strong domestic demand in the Philippines for both residential and commercial properties. We have a large shortage of housing units supported by a big base of young, employed people especially in the services sector. As the economy continues to grow, demand for commercial space will be sustained,” Mr. Guinigundo said in a text message to reporters, while pointing out that real estate developers have grown more “prudent” in building new projects in the aftermath of the Asian financial crisis.

A bubble forms due to a perceived rising demand in housing units that drive developers to build more, and is said to “burst” as demand stagnates, which will lead to an abrupt drop in property prices that could potentially jolt the banking system.

Mr. Guinigundo added that provinces like Cagayan de Oro and Iloilo are seeing a construction boom, which stand as “very strong signs” of economic growth.

By location, Metro Manila accounted for over half of the property loans during the quarter, followed by Calabarzon with 25.6% of the total. Other regions with the biggest share are Central Luzon (5.8%), Central Visayas (4.7%), and Western Visayas (3.9%).

Meanwhile, about 70.5% of property loans booked in the fourth quarter were incurred to buy new housing units, the central bank said. Nearly half of the debts were used for condominium purchases, followed by single detached units at 43.9%. Townhouses took a 7.6% share, although the BSP said that loans across all housing types grew from a year ago.

Philippine banks granted P529.904 billion in total home loans in 2016, nearly a fifth higher from a year ago and accounted for 34.9% of the approved property loans.

The BSP collects RREPI data from the mandatory reports submitted by banks, which cover the amounts and profiles of the home loans which they hand out every quarter.