AUTHORIZED building permits saw a continued decline in unprecedented double digits during January, as reported by the Philippine Statistics Authority (PSA).
The PSA, referencing preliminary figures, indicated that building projects included in the permits totaled 12,526 in January, decreasing by 14.6% from 14,665 the previous year.
This marked the second consecutive month of reduced construction starts. The January downturn was more significant than the revised 5% year-on-year decrease recorded in December of last year.
This represented the most substantial decline to date since the PSA commenced monitoring the metric on a monthly basis in January 2024. Previously, data on approved building permits was disseminated on a quarterly basis.
In January, building projects covered a floor area of 3.72 million square meters (sq.m), reflecting a 29.5% increase from the same month last year.
Construction projects represented by the permits were appraised at P48.58 billion in January, which is 26.1% higher than the P38.52 billion noted the previous year.
Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., mentioned that the downturn in construction activity could indicate a “waiting” attitude from developers anticipating interest rate reductions this year, which may help them reduce financing costs for these projects.
“I foresee this behavior changing this year as rate cuts are anticipated and the prices of construction materials have stabilized,” he stated in an email.
Last year, the Bangko Sentral ng Pilipinas (BSP) reduced benchmark rates by a total of 75 basis points (bps) since its easing cycle began in August, bringing the policy rate to 5.75%.
Nevertheless, in February, during its initial policy meeting of the year, the BSP maintained its policy settings, surprising market forecasts and simultaneously indicating fewer rate cuts this year.
BSP Governor Eli M. Remolona told Bloomberg in a televised interview on March 19 that the central bank could still lower rates next month by up to 75 bps if economic performance deteriorates.
Headline inflation rose by 2.9% in January, remaining steady from December.
In February, inflation decreased to 2.1%, resulting in an average inflation rate of 2.5% for the first two months, which is within the central bank’s 2-4% target.
Furthermore, retail price growth in the National Capital Region (NCR) slowed to 1.2% in January, marking its slowest pace in five months.
The construction materials retail price index (CMRPI) in January was slower than the 1.5% seen in December and the 1.4% recorded in January 2024.
Conversely, the construction materials wholesale price index (CMWPI) also decelerated to a historic 0.1% that month, down from 0.2% in December and 1.5% the previous year.
The CMRPI is based on 2012 constant prices, while the CMWPI is calculated based on 2018 constant prices.
The PSA highlighted that residential construction had the highest number of projects at 7,671, accounting for 61.2% of total constructions during the month.
Nonetheless, this segment fell by 14.1% year-on-year. Residential projects were valued at P20.94 billion, up from P16.35 billion in January 2024.
Single-family homes represented 89.5% of the residential category, with approved permits decreasing by 11.3% to 6,863.
Permits for apartment buildings decreased by 35% to 708, while permits for duplex or quadruplex homes also fell by 13% to 80.
Nonresidential projects, in contrast, declined by 4.3% to 3,138 from 3,278 in January 2024.
These projects constituted 25.1% of the total and were valued at P24.16 billion, up 40.4% from the previous year.
Approved commercial constructions, which comprised 72.9% of the nonresidential category, dipped by 3.1% to 2,288 from 2,362 in January 2024.
Institutional permits also decreased by 0.6% to 480, while industrial permits dropped by 13.1% to 193.
Meanwhile, approved agricultural projects fell by 7.6% to 109 from 118 a year ago. Other nonresidential projects declined by 26.9% to 68 year-on-year.
Alteration and repair permits decreased by 17% to 977 and were valued at P2.49 billion.
Conversely, approved permits for additions, involving construction that enhances the height or area of an existing building, surged by 24.8% to 463 from 371 in January 2024.
Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) recorded the highest number of approved building projects, accounting for 26.2% of the total, with 3,279 construction projects, followed by Central Luzon (1,314 permits) and the Ilocos Region (1,135 permits).
The PSA indicated that construction statistics are compiled from the original application forms of approved building permits as well as demolition and fencing permits collected monthly by the agency’s field staff from local building officials nationwide. — J.P.G. Villanueva
