The housing market plays a significant role in growing and maintaining Philippines’ economic stability. Generally, there is a great deal of optimism within the market due to the upward trend in foreign direct investment (FDI). Not to mention the overall positive credit ratings the International Monetary Fund (IMF), Asian Development Bank (ADB), and Standard and Poor’s (S&P).
Let’s take a look at the housing market in 2016 and beyond.
Real estate developers are aggressive, investing in all sectors not just residential, but also office, industrial, retail and mixed-use. Developments are happening across the country – in-city, near and outside the city and into the main districts. The reason behind is the strong demand for housing. Two of the indicators of this condition are the rising number of housing loans and the rising number of residential licenses to sell.
Based on the data of Bangko Sentral ng Pilipinas (BSP), the housing loans increased by 29.5% in the first quarter of 2015. In the second quarter of 2015, licenses to sell increased by 2% based on the statistics of Housing and Land Use Regulatory Board (HLURB). The increase is apparent in various housing categories such as open market housing, mid-income housing, low-cost condominium, commercial condominium and socialized housing. The highest increases are apparent for socialized housing with 82.42% and low-cost condominium with 2.81% from the previous year. These are often the starter homes of Filipinos especially the young ones. It also means that the developers are ready to tackle the segment that mainly comprised the country’s housing backlog.
The high demand for residential properties is complemented by the steady availability of housing supply. Nonetheless, the accessible supply is concentrated on residential buildings especially in the upmarket.
Also, Colliers International’s projected increase in the number of units in 2016 are 13,519 – 4,148 units in Makati CBD, 7,028 units in Fort Bonifacio, 1,355 in Ortigas Center and 988 units in Eastwood.
When it comes to prices, there is a strong house price increase. A three-bedroom condominium unit in Makati Central Business District (CBD) cost increased by 7.91% per square meter (Php149,300). In Rockwell Center, the increase was 11.5% (PHP158,000) while in Bonifacio Global City (BGC), it was 9.7% (PHP148,000).
The 2016 year-on-year predictions on the average prices of a three-bedroom condo unit are 5.77% in Makati CBD and 5.09% in BGC. In Ortigas Center, the y-o-y prediction is 5.32%.
In the coming years, one factor that will mostly impact the housing market is the country’s political environment. The current administration’s advocacy against graft and corruption is one of the reasons for favorable growth forecast and ratings.
At present, the Philippines is one of Asia’s fastest growing economy. The current Global Competitiveness Index is 52 among 144, up from 59 in 2014 and 65 in 2013. These might change in the future, and the changes may or may not benefit the ever-growing numbers of homeowners and renters.
In sum, the housing market in the Philippines is bullish. Spending power is relatively high, solidifying the capacity to absorb supply. However, there are long-standing challenges, and the political instability of the country can be seen as the main challenge.