Mass housing

According to Statista, as of the second quarter of 2022, the average selling price per square meter of condominiums in Metro Manila amounted to P225,000. That’s quite an increase from the P90,000 per sqm (preselling) I paid for my unit some years ago.

Lamudi estimates the average condo price in NCR is P113,000 per square meter, but that was in 2015. For illustration, let us use this figure to determine affordability for the working middle class.
This is how Lamudi’s computati looks like:

“Multiply that by 60, a 60-square meter condo unit can have an average price of P6,780,000. The 20 percent down payment is equivalent to P1,356,000. The remaining amount that will be applied to a housing loan is around P5,424,000 or P30,133.33 monthly for a 15-year loan tenor, not including the fixed interest rate, insurance, taxes, and other payables.

“Ideally, your monthly mortgage should not exceed 30 percent (if your loan is above P1,250,000) and 35 percent (if loan is below P1,250,000) of your monthly income. That means, metrowide, a prospective condo buyer needs to have a salary of at least P100,444 to P150,000 per month in order to afford a 60-sqm condo…

“However, the data gleaned from Lamudi’s analysis is just an estimate. Real property taxes and insurance costs will vary depending on the location and type of property, not to mention that buyers do not have uniform lifestyle and spending habits.”

Lamudi’s 2015 data sounds forbidding for young couples. It would seem that the property sector is not addressing the housing needs of people who are not rich, but not poor.

But why are condos priced approaching P600,000/sqm reportedly selling out within days of launch? That’s because there is enough liquidity among the very rich looking for some place to park their money other than in a bank account. There is also an element of speculation since high end condo units from Rockwell or Ayala, for example, have appreciated quite well.

From the perspective of the total economy, money invested in condos for speculation is so much of our scarce resources not being productively used. The very rich could have left their money in the bank and it could have been used to fund productive purposes.

At the other end of the spectrum, the President is pushing for a P1 billion housing subsidy fund for low-income households. Housing Secretary Jose Rizalino Acuzar explained that the fund would be used to subsidize interest rates to bring down the monthly amortization from around P8,000 to P3,000.

The plan, according to Acuzar, is to construct six million homes over the next six years, or a million homes a year to benefit some 30 million Filipinos. One year of the six-year term is over so they have much to catch up.

The first phase is the construction of two 33-story buildings with a total of 2,160 units in the Batasan area that is expected to be completed in three to four years, Acuzar said.

The President is also set to sign an executive order reserving all idle state-owned lands – estimated to be more than 16,000 hectares for government housing projects. But little movement on the ambitious project can be seen today. From the looks of it, the six million units is like the P20/kilo rice… an aspiration.

Experts in one of my Viber groups aren’t too optimistic about the Marcos housing project. They say the administration is making the same mistake made through the years.

The basic point, they said, is the housing problem cannot be resolved through the “production” approach alone wherein the government calculates the housing gap then tries to close the gap by promoting and funding construction, ignoring capacity to pay, credit risk of buyers, etc.

“Clearly there are many obstacles to addressing the housing backlog. But even if land supply, zoning restrictions, access, construction/ development capacity etc., were addressed, lack of affordability remains the most formidable constraint. In many ways, the problem of low-income housing is a problem of low income, not of housing. To make a dent, massive (but not regressive) subsidies are required.”

For low-income families, homeownership is a low priority. They would rather acquire income generating assets such as motorcycles, service vehicles, tools, etc, and rent near employment opportunities. They are already paying high rents in crummy slum houses, which can almost be the same as rental payments in a more decent high-rise long-term housing project.

Our housing development programs have been driven by developers who only want to construct houses and get paid, without taking any risk on the capacity of the low-income family to pay. They pass this risk to banks, and the government (NHMFC). What we need are rental housing developers (can be LGU PPPs) that will manage the property over the long run.

Or developers like Gerry Choa. Gerry thinks the high cost of home ownership produces a mismatch in a poor person’s income earning capability and his living expenses. In cooperation with Imus, Gerry conceptualized the development of affordable rental housing for the urban poor. It is designed to reduce their cost of living, as well as reduce the LGU’s cost of delivering social services, public health, education, etc.

Gerry’s main project is developing the 2,000-hectare Lancaster City in Cavite. He made sure the development is affordable (between P1.7 to P7.5 million per housing unit). They have a K-12 school within the development, a commercial center, access to health services, and a bus service to take residents to and from NCR for work every day.

It is now a community of 125,000 people and the masterplan includes an IT-business park that will enable residents to work near where they live. It has a church, community center, and recreation areas.

Housing, not just for the poor, but also for the middle class, is a big problem that can only be solved if the very profitable private property developers work with the government towards a sustainable solution. They should be required to develop affordable housing near their high-end developments, not 50 kilometers or more outside NCR.

Ayala’s Vertis was built on NHA land meant for public housing. NHA reneged on its obligation. That’s our problem.

Boo Chanco’s email address is [email protected]. Follow him on Twitter @boochanco