BANKS hiked their exposure to the volatile property sector to breach the P2-trillion mark as of end-September as both real estate lending and investments surged, according to latest central bank data.

Total real estate exposure reached P2.006 trillion in the nine months to September, according to the Bangko Sentral ng Pilipinas (BSP). The amount is 17.9% more than the P1.702 trillion tallied in 2016’s comparable period and inched up from the P1.924 trillion recorded as of end-June.

Banks gave out more loans for home purchases and property development at P1.71 trillion, up from P1.451 trillion last year.

Lending for commercial property increased by a fifth to P1.124 trillion in the same periods, compared to a 15.6% increase in home loans to P585.51 billion, data showed.

House prices dropped by 4.6% between April and June — the first time in two years that property prices slid — according to results of the central bank’s latest residential real estate price index.

Central bank officials have noted that property prices remain “volatile” even as they assured that current levels, thus far, have not been alarming.

Despite the double-digit increases in borrowings, non-performing loans for real property were little changed at P29.436 billion, just 4.9% more than the P28.074 billion left unpaid at least a month after due date a year ago.

Still, the increase in real estate lending is slightly slower than the 19.6% increase in total loans granted by banks, which reached P8.39 trillion as of September.

Despite the growth in property lending, its share relative to banks’ total loan portfolio settled at 19.28%, down from the 20.79% ratio posted in end-June and a 21% share in the comparable year-ago period.

The BSP requires all banks to keep their real estate exposures to a maximum of 20% of total loans, as part of a risk management arsenal. The central bank has been closely monitoring the property market since the 1997 and the 2008 global economic crises, as mortgage delinquencies triggered a global recession following a correction in housing prices abroad.

Investments in property-related assets and securities also posted a 17.9% growth in September to reach P295.816 billion, coming from P250.903 billion a year ago.

Placements in debt instruments accounted for roughly two-thirds of banks’ total property exposure at P184.382 billion, while bets on property and developer-related shares totalled P111.434 billion, the BSP said.

Economists and property developers have allayed fears of a bubble in the Philippines, saying actual buoyant demand for both residential and commercial space — rather than mere speculation — has been driving prices up. — Melissa Luz T. Lopez