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Housing backlog

DEMAND AND SUPPLY - Boo Chanco (The Philippine Star) - June 23, 2021 - 12:00am

Senator Manny Pacquiao promised last week that if he is elected president, he will wipe out the housing problem in four to five years. There will be no more squatters, he declared, because everyone will have a house or a condo unit, and they will not pay anything, not even a peso.

PacMan has been passionate about housing. Even now, he is spending his own money to build houses for his constituents in Sarangani. Perhaps, having lived on the streets in his youth, he knows the need and he intends to address it.

Another presidential hopeful is also focused on providing housing. Manila Mayor Isko Moreno is building what he calls Tondominium projects, mid-rise low-cost housing for the city’s homeless. An initial funding of P10 billion has been set aside.

I am glad that at least two presidential hopefuls are looking at the housing problem and plan to do something about it. The problem is huge, and I am not sure they know how big it is.

Urban planner Art Corpuz, who has worked on housing developments, provided context in a comment he posted in one of my Viber groups:

“Current housing backlog is 6.5 million units (and increasing); Low-cost estimate of socialized housing unit is P500k/unit (on cheap land away from employment centers, excluding access roads and external utilities; 36sqm lot and 22sqm floor area), total cost is P3.25 trillion.

“Current budget of housing agencies: P4B. Annual housing production is 100k-200k units (target).”

Our past experience has not been good. Socialized housing was built in inexpensive land but these properties are usually in far-flung areas with no access to water or convenient transportation. Eventually, relocated squatters abandon such houses and return to the city.

A former finance secretary commented in our group: “Squatter relocation/free housing attempts have been among the biggest least successful political rackets in our economic history. Have to be persuaded about the latest brilliant plan.”

Another member of my group commented: “The challenge to be addressed is the informal settlers in urban areas. There have been so many failed attempts to relocate them because the starting point of government is cheap (free?) land. That is why relocation sites now go as far as Norzagaray.

“There are so many studies already that show that once these urban informal settlers are relocated very far from where they were living, the government basically condemns them to a life of poverty. That is why they just abandon their government housing and just go back to the slums of the city.

“For these urban informal settlers, ‘in city’ housing is the solution. If the government wants to keep poor rural people in the provinces, then it should create the opportunities there. This was accomplished by ecozones.

“During my youth, my province of Cavite was mostly agricultural, occasionally used by rustlers to hide carabaos stolen from Batangas, and by outlaws (Nardong Putik types?) to dump salvage victims from Manila. The ecozones (and urban scrawl) developed the province.”

I asked my friend, JJ Atencio, a pioneer in affordable housing, what he thought of PacMan’s focus on housing.

“First, we must realize we are dealing with two issues here: one is the housing backlog, which is formal sector housing, and the other is housing for the poor.

“For example, there’s some confusion about socialized housing. When we talk about socialized housing, this is not housing for the poor, but the lowest end of formal sector housing.

“Socialized housing caters to employed people with formal jobs and incomes, HDMF (Pag-Ibig Fund) members, etc. We shouldn’t and cannot equate socialized housing as housing for the poor.

“So, for formal housing, we can do a couple of things:

“Encourage more business to go into housing by eliminating the most frustrating barrier to entry: excessive government red tape, permits and regulation. When I started out 25 years ago, it took only four months to get a housing project going. Today, we’d be lucky if we can get a project going after 1.5 years.

“Housing finance – lower interest rates. Why doesn’t the government provide socialized housing at one percent or less interest rate if it is serious in addressing the backlog?

“I would also advocate the return of the HDMF (Pag-IBIG Fund) two-year buyback program where take outs were given in seven days instead of today’s three to four months.

“The difference is dramatic: a seven-day takeout means that a developer’s cash conversion cycle increases to 52X compared to today’s 4X. This means the developer needs smaller capital outlay to produce units, leading to higher output levels without incurring additional debts.

“As for housing for the poor- that is NHA’s territory – I’ve always thought about this:

“Why not NHA create three major precast manufacturing plants: one each for Luzon, Visayas, Mindanao whose main job is to churn out pre-cast wall panels/ components totaling one million houses per year. In six years, this would be equal to six million units which would eliminate the backlog in one presidential term.

“All NHA has to do is to accredit precast housing erectors and fitters to create these precast houses.

“When we did precast, we could build a row of townhouses in seven days. The efficiency and speed and economies of scale of pre-cast will make this realistic and achievable.”

Atencio is glad PacMan has brought the housing issue to the forefront.

“He’s the first presidential hopeful who said something more than motherhood about housing and homelessness since GMA.”

Atencio credited GMA for making housing the centerpiece of her economic platform. “It was during her term that HDMF (Pag-IBIG Fund) two-year buyback – seven-day takeout was instituted, ushering nine years of consistent housing finance policy.”

I still think the big property developers have a lot to contribute towards addressing our housing problem. It is unconscionable that they are reaping all that profit on luxury housing without performing their social obligation to the community.

They should, on their own, build more affordable housing units than required by law and within city limits where residents can commute to work.

Most of the big developers benefited from government land, in Bonifacio, Vertis, Food Terminal, etc. They have a social responsibility to cater to all of society, not just the elite.

 

 

Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco

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