There is no immediate likelihood of the country facing a real estate asset bubble, though property prices have risen significantly in the first quarter of 2016, says the central bank.
The first nationwide Residential Real Estate Price Index, which the Bangko Sentral ng Pilipinas has created, reported that residential property prices have advanced 9.2 percent in the first three months of the year from 5.1 percent a quarter ago. Condominium units, particularly, posted the highest quarter-on-quarter growth in prices at 12.9 percent, followed by townhouses at 8.5 percent.
However, both BSP Governor Amando Tetangco Jr., and the Deputy Governor Diwa Guinigundo, speaking to reporter on the sidelines of the BSP-Bank of International Settlements research conference in Mactan, said there was no cause for alarm. “We believe there’s no real estate bubble right now,” said Tetangco.
According to Tetangco, in price movements, some have increased slower than others and the BSP wants to look at the total picture. “At this point in time, if you look at other indicators like building permits, there’s no bubble,” he said, stressing that there is no cause for alarm in the acceleration of prices of condominium units.
Guinigundo described the rise in demand and prices as representing “a vibrant housing industry in the Philippines.” And the survey conducted for the Index, he added, was a complete snapshot of the country’s housing sector.
The breakdown of the survey showed that real property prices in the National Capital Region (NCR) and areas outside NCR increased by 9.7 percent and 9.4 percent from 6.3 percent and 5.9 percent a quarter ago, respectively.
Apparently, a major factor helping demands up is the perennial traffic congestion in Metro Manila. Condo units were the most common house purchases in the capital region while in areas outside NCR, single-detached houses were the most popular. And according to Guinigundo, demand for condo units has increased in Metro Manila “because most urban workers prefer to stay in the city during weekdays rather than go home everyday and brave the heavy traffic.” Distance, he said, “is a very vital reason.”
By region, NCR accounted for 50.4 percent of the residential real estate loans granted in the first quarter 2016, followed by Calabarzon 28.4 percent, Central Luzon7.6 percent, Visayas3.8 percent, and Central Visayas3.3 percent.
The index also showed that about seven out of 10 residential real state loans granted were for the purchase of new housing units.
The index measures the average changes in the prices of different types of housing units over a period of time across different geographical regions and the growth rate the index records indicate price inflation.
It is computed as weighted chain-linked index based on the average appraised value per square meter weighted by the share of floor area of housing units.
Besides the overall index, sub-indices have also been constructed for the different types of housing units, such as single, duplex, apartments, and residential units.
Guinigundo said the index could serve as a measure in assessing the trends in housing prices.
by MAYVELIN U. CARABALLO | The Manila Times | June 5, 2016