APPROVED building permits declined 5.9% year on year in December, the Philippine Statistics Authority (PSA) said in a report, citing slowing economic growth and cautious developer sentiment.
According to preliminary data, the PSA said building projects covered by the permits fell to 11,411 in December from 12,127 a year earlier.
This was a steeper decline than the 2.6% contraction in December 2024, but an improvement over the 10.1% drop seen in November 2025.
In December, construction projects covered 2.67 million square meters of floor area, down 8.2% year on year.
Approved building projects were valued at P33.62 billion, 13.4% lower than a year earlier.
Marco Antonio C. Agonia, an economist at the University of Asia and the Pacific, said the decline in building permits may be attributed to the weaker growth outlook and still-tight monetary conditions.
Economic growth slumped to 3% in the fourth quarter of 2025, bringing the full-year reading to a five-year low of 4.4%, the PSA reported.
“Property developers may have deferred their projects facing lower demand prospects. The fallout of the delay in government disbursements for infrastructure projects (due to the spending freeze) may have also continued to spill over into building permit approvals,” Mr. Agonia said in an e-mail.
Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said via Viber that the continued decline in building permits reflects a pause rather than a collapse.
“Elevated interest rates, elevated construction costs and developer caution are delaying new projects, especially in residential and smaller-scale builds,” he said.
The key policy rate fell to 4.25% from 4.5%, the lowest in over three years, since the 3.75% in August 2022.
The Monetary Board has lowered borrowing costs by a total of 225 basis points since it began its easing cycle in August 2024.
The PSA also reported that residential projects, which accounted for 63.1% of all permits, fell 7% to 7,203 in December.
These projects were valued at P12.13 billion, down from P17.40 billion a year earlier.
Single homes, which accounted for 87.6% of the residential category, fell 8% year on year to 6,312.
Applications for apartment buildings declined 12.7%, while applications for duplex or quadruplex homes surged 90.6%.
Meanwhile, nonresidential projects, which accounted for 23.4% of the total, contracted 3.6% year on year.
Permits for nonresidential projects were valued at P17.81 billion, slipping 1.2% from a year earlier.
Approved commercial construction applications accounted for 67.6% of all nonresidential projects at 1,802.
Industrial permits fell 12.4% to 205, while institutional projects fell 1.8% to 497 approvals.
Approved permits for additions, or construction that increases the height or area of an existing building, declined by 2.3% to 387 during the period.
Alteration and repair permits recorded an annual drop of 8% to 858, though their value rose 23% year on year to P2.60 billion.
Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) had the most approved construction projects during the period, accounting for almost 25% of the total with 2,838 permits.
This was followed by Central Luzon (with a 10.6% share and 1,215 permits), and Ilocos Region (8.8% and 1,005 permits).
“What we’re seeing is a waitand see mode,” said Mr. Ravelas.
“The good news is that once borrowing costs ease and demand stabilizes, permits should recover — construction activity typically follows with a lag,” he added.
Mr. Agonia said the construction industry may see a minor boost in 2026.
“The annual decline means 2026 will be compared against a low base, leading to higher growth figures. However, construction appetite may only truly normalize by the second half of the year, when many analysts expect government spending and investor sentiment to recover,” he said.
Mr. Agonia added that he expects more in the coming months depending on how business sentiment improves.
“Some constructive factors to look out for are returning government and private sector capex (capital expenditures), along with the impact of the cumulative rate cuts which may only be felt by the latter half of this year,” he said. — Pierce Oel A. Montalvo
