Home prices surged by a record 27% in the second quarter, driven by strong demand for high-end residential projects and an uptick in costs amid the pandemic-induced lockdown, the central bank said.
The Residential Real Estate Price Index (RREPI) jumped 27.1% year on year in the April to June period, the highest annual growth recorded since the series started in 2016. This was also quicker than the 12.4% hike in the first three months of 2020 and the 0.4% rise in the April to June 2019 period.
The index gauges the average change in home prices across building types and locations and provides the BSP an insight into the property market, bank exposure to which is regulated.
“Banks cited the following reasons for the uptick in real estate prices in Q2 2020: higher demand for high-end projects, which drove the average price per square meter (sq.m) upwards; and rising prices of construction materials, labor costs and other indirect costs, e.g., higher marketing costs of appraised premium properties,” the BSP said.
The biggest contributor to the rise in housing prices were loans for the purchase of condominium units, particularly in Metro Manila.
Condominium units recorded the fastest price uptick at 30.1% in the April to June period, while prices of single detached/attached houses jumped by 24.1%, reversing the 4.2% decrease last year.
Prices of townhomes and duplexes also increased by 10.8% and 0.8%, respectively in the April to June period.
In Metro Manila, prices of residential homes rose 34.9% with the fastest growth seen in single detached/attached houses (70%), followed by condominium units (36.4%), and town houses (5%).
In the provinces, residential property prices also rose by 18% with the uptick led by single/detached homes (21.1%), followed by townhouses (13.2%), duplexes (5.2%), and condominium units (3.1%).
Residential home prices increased by an average of 6.08% in 2019 against a 2.95% rise in 2018.
As Metro Manila remained under lockdown for most of the second quarter, residential real estate loans granted by banks dropped 55.2% from a year ago.
Based on the type of housing units, 62.7% of the loans were granted for the purchase of condominium units, followed by single detached/attached houses (32.1%) and townhouses (4.8%).
A less dismal outlook for remittance inflows and the slight improvement in the labor market is seen to have a positive impact on the real estate market, said Colliers Philippines Research Manager Joey Roi H. Bondoc.
“Note that OFWs partly drive the demand for mid-income residential units in the country. House and lot projects in urban areas outside Metro Manila also continue to post a decent take up from OFW investors,” Mr. Bondoc said in a note.
Cash remittances rose 7.8% year on year to $2.783 billion in July, marking the second straight month of growth after the slump caused by the pandemic.
Year-to-date, inflows dropped 2.4% to $16.802 billion. The BSP expects cash remittances to decline by 5% this year due to the coronavirus crisis.
Meanwhile, the jobless rate stood at 10% in July, easing from the record 17.7% in April but still higher than the 5.4% a year ago. The July unemployment rate represents 4.571 million jobless Filipinos, lower than 7.254 million in April, but higher than 2.437 million in July last year.
In August, the central bank eased the real estate loan limit of big banks to 25% from 20% in a move to provide added liquidity for lending to the sector and to lift the economy during the crisis. — Luz Wendy T. Noble