Still no property bubble, says BSP

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) reiterated there is no overheating in the country’s property market amid the strong demand for housing from the young and economically active population.

“No there is no evident sign of a bubble in the real estate sector today. You see there continues to be a strong demand for housing,” BSP Governor Amando Tetangco Jr. said.

Tetangco said progress of the housing sector is expected to be sustainable due to the favorable demographics in the country with the young and economically active population.

He added there is additional demand for property amid the changes in lifestyle wherein people, particularly those who belong to the business process outsourcing (BPO) sector, want to have a place to stay close to their workplace.

“So all of these put together, we can say that the real estate sector is in a good position at this point,” Tetangco said.

Latest data from the central bank showed real estate loans extended by universal and commercial banks rose five percent to P1.14 trillion in end-June this year from P1.08 trillion in end-March.

“Even when one looks at the exposure of banks, the banks have been quite prudent in providing loans to real estate buyers as well as real estate developers,” he said.

The BSP also cited the change in the business model adopted by developers as compared to the time of the Asian financial crisis in 1997 and 1998.

Tetangco explained property developers now build one tower first then sell the units and build the second tower after they sell enough units on the first tower. “So it is clear that the business model now is demand driven and I think that make for a healthier real estate sector,” he said.

Tetangco led the Financial Stability Coordination Council (FSCC) in signing a memorandum of agreement (MOA) with the Housing and Land Use Regulatory Board (HLURB) to foster financial stability in the country.

Aside from Tetangco, other signatories were Finance Secretary Carlos Dominguez as represented by National Treasurer Roberto Tan, Securities and Exchange Commission chairperson Teresita Herbosa, Philippine Deposit Insurance Corp. president Cristina Orbeta, Insurance Commission chief Emmanuel Dooc and HLURB CEO and commissioner Antonio Bernardo.

The pact facilitates information sharing among the agencies as a proactive initiative of the FSCC to better understand the interconnectedness and to mitigate the buildup of systemic risks in the financial system.

Consistent with the overall objective of fostering financial stability, the FSCC created in January 2014 collaborates among its members and with other industry sectors on a broad array of developments and issues in the financial system.

Cognizant of the social agenda of providing shelter as a basic need of the Filipinos, the FSCC and HLURB are partners in supporting the development of well-planned and sustainable communities in the country.