APPROVED building permits fell 5.5% year on year in February, a reversal from the 12.5% growth posted a year earlier, the Philippine Statistics Authority (PSA) said in a report.

Preliminary PSA data indicated that building projects covered by the permits numbered 13,100, equivalent to 3.61 million square meters of floor area.

Construction projects represented by the permits were valued at P43.27 billion, up 40.3% from a year earlier.

“(The drop in approved building permits) is driven by inflationary pressures and the persistence of high interest rates constraining developers from boosting construction activity,” John Paolo R. Rivera, president and chief economist at Oikonomia Advisory & Research, Inc., said in a Viber message.

In February, inflation accelerated to 3.4%, the strongest reading since the 3.9% posted in December.

Permits for residential projects, which accounted for 63.7% of the total, fell 9.4% to 8,345.

  These projects were valued at P19.34 billion, against the P16.03 billion a year earlier.

Meanwhile, single homes made up 85.1% of the residential category with approved permits declining 15.3% to 7,104.

Applications for apartment buildings grew 50.9% to 1,088 while applications for duplex or quadruplex homes were up 59.6% and totaled 142.

Nonresidential projects, on the other hand, totaled 3,177, up 1.4% from a year earlier, accounting for 24.3% of the total.

Nonresidential permits were valued at P19.47 billion, up 59.4% from a year earlier.

Meanwhile, approved commercial construction applications made up 69% of all nonresidential projects, down 2.1% to 2,192.

Institutional building permits rose 27.6% to 523, while industrial permits dropped 14.6% to 229.

Approved agricultural projects totaled 131, down 9.7%, while other nonresidential projects totaled 102, up 41.7%.

Alteration and repair permits amounted to 1,034, down 2.8% from a year earlier and were valued at P3.52 billion.

Mr. Rivera said the slowdown in approved building permits is expected to continue as interest rates remain high with no indication of easing.

The Bangko Sentral ng Pilipinas kept its benchmark rate at 6.5% for three consecutive meetings in February.

The PSA said that construction statistics are compiled from the copies of original application forms of approved building permits as well as from the demolition and fencing permits collected every month by the agency’s field personnel from the offices of local building officials nationwide. — Karis Kasarinlan Paolo D. Mendoza