Fall in house prices worsens in second quarter

The coronavirus pandemic has continued to dampen demand for residential properties, particularly in Metro Manila. – PHILIPPINE STAR / MICHAEL VARCAS

Through Luz Wendy T. Noble, Journalist

RESIDENTIAL PROPERTY PRICE in the second quarter contracted at its highest rate since 2016, mainly due to the continued decline in condominium and single-family home prices amid the protracted pandemic.

Data released by the Bangko Sentral ng Pilipinas (BSP) on Friday evening showed that the Residential Property Price Index (RREPI) declined 9.4% per year during the April to June period, worsening from -4.2% in the first quarter .

This is the largest annual contraction since the start of the data series in 2016.

Weak demand for residential properties continues to weigh on housing index in second quarter, hits record low

The BSP said the pandemic continued to dampen demand for residential properties.

“High base effects may also have contributed to the fall in prices given the recorded peak of the index (26.6%) in the second quarter of 2020, ”he added.

On a quarterly basis, real estate prices rose 4.8%.

The RREPI tracks the average evolution of residential property prices by housing type and location, giving the BSP an overview of the real estate market where banks’ exposure is regulated.

Nationally, condominium prices fell 14.3% year-on-year in the second quarter, reversing the 30.1% increase recorded in the same period last year. It was also the largest contraction since falling 15% in the third quarter of 2020. It was also the fourth consecutive quarter of decline in condominium prices.

Demand for properties has been subdued, particularly in Metro Manila, said Joey Roi H. Bondoc, associate director of research at Colliers International Philippines.

He noted that only 10,000 condominium units were taken to the presale market for the first half of the year, adding that the industry is unlikely to match the 36,000 units brought in in 2020.

“We no longer see the demand for POGOs (Philippine Offshore Gaming Operators), while end users and local investors are still waiting to see,” Bondoc said in a Viber message.

Chinese nationals employed by POGOs had fueled demand for condominium rentals before the pandemic, prompting many unit owners to increase rental fees.

In addition, single-detached homes saw their prices drop a record 7.4% in the second quarter, a reversal from the 23.4% increase in the second quarter of last year.

In contrast, prices for duplexes and townhouses rose 28.9% and 15.1% year-on-year from April to June, respectively.

The RREPI also showed that residential property prices in the NCR continued to fall year over year, but improved quarter over quarter.

Home prices in Metro Manila fell 18.3%, mainly due to lower prices for single semi-detached / detached houses (-22.5%), condominium units (-17.8% ) and townhouses (-3.5%).

Quarter-on-quarter, home prices rose 3.4% in Metro Manila.

This annual drop in house prices in the NCR reflects falling demand for urban housing as working from home has become the norm, said Asian Institute of Management economist John Paolo R. Rivera.

“It is more economical for employees to reduce rental costs and just stay in their permanent residence and reallocate rental expenses to telecommunications expenses. Given the uncertainties over income and employment, it is difficult to maintain a medium to long term rental commitment, ”Rivera said in a Viber message.

In the provinces, residential property prices fell 0.6% against a backdrop of a 6% drop in prices for single-family semi-detached houses. In contrast, other types of dwellings such as duplexes (24.3%), townhouses (27.2%) and condominiums (9.6%) posted higher prices.

Central bank data showed second-quarter residential mortgage loans increased 82.3% year-on-year, but fell 3.6% from Fifirst trimester.

Half (49.5%) of these loans were used for Fifinance the purchase of condominium units, followed by single detached houses (39.2%), townhouses (10.3%) and duplexes (0.9%).

NCR accounted for the bulk of loans at 44.9%, followed by Calabarzon (26.4%), central Luzon (10.5%), Central Visayas (5.3%), Western Visayas (4 , 4%), the Davao region (3.2%) and the north. Mindanao (1.2%). Together, the regions accounted for 95.9% of home loans approved in the second quarter.

The pandemic and its impact on working conditions and employment will continue to weigh on the housing market, Mr. Rivera said.

On the other hand, he said resuming vaccinations would mean more people will eventually be allowed to return to offithese which would increase the demand for housing in cities.

“Until we see a more predictable movement in the economy, incomes, jobs, house prices will continue to be limited,” Mr. Rivera said.

The country’s unemployment rate in July improved to 6.9%, representing 3.073 million Filipinos. However, the underemployment rate worsened to 20.9% or 8.692 million Filipinos.

Meanwhile, Bondoc is optimistic that the money sent by Filipino Workers Abroad (OFW) could boost demand for housing in rural areas.

Remittances rose 2.5% year-on-year to $ 2.783 billion in July. That brought the total for the year to $ 17.771 billion, up 5.8% from the same period of 2020.

“The demand for houses and land in the provinces will remain stable given the sustained remittances from OFWs which are starting to gain momentum, ”said Mr. Bondoc.

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