Rising residential real estate prices not worrisome—BSP official

The Bangko Sentral ng Pilipinas (BSP) on Friday reported the slight year-on-year uptick in residential real estate prices in the last quarter of 2016. (Photo: Bangko Sentral ng Pilipinas/ Facebook)

MANILA—The Bangko Sentral ng Pilipinas (BSP) on Friday reported the slight year-on-year uptick in residential real estate prices in the last quarter of 2016.

However, BSP Deputy Governor Diwa Guinigundo said it was understandable since the expanding domestic economy had the same impact on people’s financial capacity.

Data released by the central bank show that residential real estate price index (RREPI) rose to 113.9 as of last December from 113.6 in the same period in 2015, primarily due to faster increases in the prices of residential properties in Areas Outside of the National Capital Region (AONCR).

It shows that prices of townhouses went up by 6.2 percent, faster than year-ago’s five percent growth and the 4.9 percent increase in the third quarter of last year.

On the other hand, prices of single-detached/attached houses contracted by one percent in the last quarter of 2016 from a growth of 8.2 percent same period in the previous year and the 2.4 percent expansion in third quarter of last year.

Growth rate in the prices of duplex was also in negative at 12.3 percent in the last quarter of 2016 against the 5.1 percent contraction in the previous quarter and year-ago’s 5.8 percent decline.

Prices of condominium units grew 1.8 percent in the last quarter of 2016 from a 3.1 percent expansion in the third quarter and year-ago’s 4.1 percent increase.

The central bank said about seven in 10 real estate loans in the last quarter of 2016 were for the purchase of new housing units.

Of these new housing units, condominium units continue to account for the large part at 48.1 percent; followed by single detached at 43.9 percent; and townhouses, 7.6 percent.

”All types of housing units registered increased in the number of loans granted compared to their year-ago levels, with condominium units posting the highest growth of 37 percent,” the BSP said.

In terms of purchases by areas, those from NCR are mostly condominium units while single detached units are the common purchases in AONCR.

Guinigundo, in text message to PNA, said demand for housing units came along with the demand for commercial properties.

“We have a large shortage of housing units supported by a big base of young, employed people especially in the services sector. As the economy continues to grow, demand for commercial space will be sustained,” he said.

Monetary officials have continuously stressed that a property bubble is far from happening in the country.

Guinigundo traced this to real estate developers’ decision to be “more prudent by doing due diligence of the market as they learned their lesson during the Asian financial crisis.”

He said some developers “are willing to sign contracts for lease even before the actual construction of the building.”

“Most important, this very strong sign of economic growth is not confined in the national capital region. One sees this construction boom in such areas as Cagayan de Oro and Iloilo,” he added.