HOUSING VALUES nationwide decreased in the third quarter, marking the initial decline in over three years, according to data from the Bangko Sentral ng Pilipinas (BSP).
The Residential Real Estate Price Index (RREPI) diminished by 2.3% year on year during the July-to-September timeframe. This represented a reversal from the 2.7% increase observed in the second quarter and the 12.9% rise recorded in the corresponding period last year.
This was also the first occurrence of a drop in the RREPI since the 9.4% decrease noted in the second quarter of 2021.
The RREPI measures the average price variations of residential properties across various housing categories and locations. The data offers the BSP valuable insights as it assesses the banking sector’s risk related to the residential property market.
Information from the central bank indicated that the prices of condominium units decreased by an annual 9.4%, contrasting with the 10.6% growth seen in the previous quarter and the 8.3% rise a year prior.
The costs of duplex units plummeted by 48.1% in the third quarter, reversing the 27.1% increase from the second quarter and the 57.7% expansion recorded during the same period last year.
Conversely, the prices of single-detached or attached homes increased by 2.9% in the third quarter, quicker than the 1.7% rise in the preceding quarter, but considerably slower than the 16.8% growth observed a year ago.
Prices of townhouses edged up by 0.7% in the July-to-September timeframe, a recovery from the 0.8% decline in the second quarter. Nevertheless, it was lower than the 9.3% growth recorded in the previous year during the same time.
According to BSP data, residential property prices in the National Capital Region (NCR) decreased by 14.6% in the third quarter, worse than the 1% decline in the second quarter and the 12.3% increase last year.
In contrast, residential property prices in areas outside NCR (AONCR) rose by 3% in the period ending September, down from 4.2% and 14.3% in the second quarter and the equivalent year-ago period, respectively.
In the third quarter, the loans for residential real estate for all types of new housing units saw a decrease of 15.7% year on year.
“Specifically, loans issued in the NCR and AONCR fell by 20.3% and 13%, respectively,” the central bank stated.
“Remarkably, the double-digit year-on-year drop in residential real estate loans in the Philippines, NCR, and AONCR during the third quarter of 2024 was significant, yet not as severe as the decline in housing loan uptake observed during the pandemic, which started in the second quarter of 2020.”
BSP data further revealed that the average appraised value of new housing units in the Philippines was P86,417 per square meter (sq.m.) in the third quarter.
In the NCR, the average appraised value reached P135,076 per sq.m., while the average in areas beyond NCR was P60,804 per sq.m.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort indicated that relatively elevated land prices and rental rates contributed to reduced demand, resulting in a downward adjustment in residential real estate prices.
Separate BSP data indicated that the involvement of banks and trust entities in the property sector declined to 19.55% at the end of September from 19.92% at the end of June and from 20.55% at the end of September in 2023.
This represented the lowest real estate exposure ratio recorded in five years, or since the 19.5% noted in September 2019.
“The latest decline can be largely attributed to the Philippine Offshore Gaming Operators (POGO) ban, which prompted the withdrawal of POGO operations, leading to higher vacancies and an increase in the supply of residential real estate condominium units,” Mr. Ricafort noted.
“Consequently, prices and lease rates dropped as the POGO ban slated for Dec. 31 approached,” he added.
In a recent analysis, Colliers reported that the pre-selling condominium segment in Metro Manila “continues to face extended remaining inventory life.”
“This has compelled developers to adopt a more cautious approach and moderate new launches in the capital region,” it stated.
For the upcoming year, Colliers projected prices to increase at a quicker rate than rents, primarily fueled by “sustained demand for upscale to luxury condominium units throughout Metro Manila.”
“Colliers anticipates that the elevated vacancy levels will likely result in slow growth for rents and prices. We forecast a recovery in rental and price growth of between 2% and 2.5% from 2024 to 2026,” it remarked.
“We foresee rents and prices rebounding to pre-COVID levels by Q2 2028 and Q3 2029, respectively. The POGO sector is no longer a significant driver of office space demand in Metro Manila, with its effects spilling into the condominium market.” — Luisa Maria Jacinta C. Jocson
