Property prices up 1.8% in Q3

MANILA, Philippines — Property prices nationwide inched up 1.8 percent in the third quarter of last year on the back of sustained demand arising from the robust economic expansion, results of a survey conducted by the Bangko Sentral ng Pilipinas (BSP) showed.

The Residential Real Estate Price Index (RREPI) climbed to 111.6 in the third quarter of last year from 109.6 in the same quarter in 2016.

The RREPI measures the average changes in prices of different types of housing units over a period of time across geographical areas where the growth rate of the index measures house price inflation.

The central bank earlier said there is a strong domestic demand in the Philippines for both residential and commercial properties as there is a large shortage of housing units, supported by a big base of young, employed people especially in the services sector.

The Philippines has booked 75 straight quarters of uninterrupted economic growth over the past 18 years.

The country’s gross domestic product (GDP) growth accelerated to 6.9 percent in the third quarter of the year from the revised 6.7 percent in the second quarter, bringing the expansion to 6.7 percent in the first three quarters of the year.

Economic managers penned a GDP growth of 6.5 to 7.5 percent for this year as well as seven to eight percent between 2018 and 2020, but see inflation ranging from two to four percent until 2020.

Year-on-year, prices of townhouses and condominium units grew faster at 7.3 percent and 3.6 percent compared to the previous quarter, respectively.

On the other hand, prices of single detached housing units grew at a slower rate of 0.8 percent.

The average residential property prices in both the National Capital Region (NCR) and areas outside NCR also increased by 2.2 percent and 1.8 percent compared to year-ago prices, respectively.

In NCR, the higher growth in prices of townhouses and condominium units offset the decline in prices of single detached houses and duplexes.

Meanwhile, prices of single detached houses, townhouses, and condominium units rose, while that of duplexes declined in areas outside NCR.

For the third quarter alone about eight in 10 or 76.7 percent of real estate loans were for the purchase of new housing units.

By type of housing unit, 48 percent of residential property loans were for the acquisition of condominium units, followed by single detached units with 40.8 percent, and townhouses with 10.8 percent.

The BSP monitors the real estate exposures of universal, commercial, and thrift banks as part of its broader role of assessing the quality of bank exposures to the different sectors of the economy.

Last September, the BSP’s Monetary Board placed the real estate and project finance exposures of Philippine banks under tight watch as debt watchers and multilateral lending agencies have raised the red flag over the possible overheating in the economy.

Debt watchers led by Moody’s Investor Service, Fitch Ratings, multilateral lender International Monetary Fund (IMF) as well as investment banks warned the Philippines is now showing signs of overheating.