Residential real estate prices up in 2018 third quarter

MANILA, Philippines — The cost of acquiring a house increased in the third quarter after a series of interest rate hikes by the Bangko Sentral ng Pilipinas (BSP) to curb rising inflationary pressures.

The BSP recently reported that property prices continued to pick up as the residential real estate price index (RREPI) rose 4.4 percent to 116.5 in the third quarter from 111.6 for the same quarter a year ago.

“Year-on-year prices of townhouses, condominium units, and single detached housing units grew by 18.3 percent, 5.8 percent, and 0.2 percent, respectively,” the BSP said.

Similarly, it reported that prices of duplex units that accounted for only 0.76 percent of total new housing units, also rose by 30.7 percent year-on-year.

Quarter-on-quarter, the central bank said, RREPI edged lower by 0.6 percent.

The RREPI measures the average change in prices of various types of housing units based on data from housing loans granted by universal, commercial, and thrift banks.

The BSP said residential property prices were higher in both the National Capital Region (NCR) and areas outside NCR.

The average residential property prices in both NCR and areas outside NCR went up by 6.8 percent and 2.2 percent, respectively, compared to year-ago prices.

“In NCR, price increases were observed across all types of housing units. Meanwhile, the growth in prices of townhouses, duplex housing units, and condominium units outweighed the slight decline in prices of single detached houses in areas outside NCR,” the central bank said.

For the third quarter, seven in 10 or 71 percent of residential real estate loans (RRELs) were for the acquisition of new housing units.

By type of housing unit, 53.2 percent of residential property loans were for the purchase of condominium units, followed by single detached units with 38.3 percent, and townhouses with 7.6 percent.

By area, majority of the RRELs granted in the NCR were for the purchase of condominium units, while RRELs granted in areas outside NCR were for single detached houses.

NCR accounted for 57.4 percent of the total number of RRELs granted during the quarter, followed by areas outside NCR - Calabarzon with 23.4 percent, Central Luzon with five percent, Central Visayas with 4.2 percent, Western Visayas with 3.3 percent, Davao Region with 2.4 percent, and Northern Mindanao with 1.4 percent.

The BSP placed the real estate and project finance exposures of Philippine banks under tight watch after debt watchers and multilateral lending agencies raised the red flag over the possible overheating in the economy.

The BSP’s Monetary Board has approved enhancements to the prudential reporting requirements in order to strengthen oversight of banks’ real estate and project finance exposures.

The reportorial enhancements form part of BSP’s macroprudential toolkit and would give the regulator a better grasp of the extent and quality of exposures of big banks to project finance, especially since demand for project finance is expected to increase and gain further traction as the country moves towards achieving its infrastructure goals.

Latest data from the BSP showed loans extended by big banks to the real estate activities grew 15.4 percent to P1.35 trillion in end-October. The sector accounted for 16.8 percent of the total loans disbursed by universal and commercial banks.