HOUSE PRICES nationwide decreased in the third quarter, i the first contraction of more than three years, data from the Bangko Sentral ng Pilipinas (BSP) showed.
The Residential Real Estate Price Index (RREPI) fell 2.3% year-on-year in the July to September period. This was a reversal of the 2.7% growth in the second quarter and the 12.9% increase in the same period last year.
This was also the first time the RREPI posted a decline since the 9.4% decline recorded in the second quarter of 2021.
RREPI tracks average residential price changes across housing types and locations. The data provides the BSP with insights as it monitors the banking sector’s exposure to the residential property sector.
Central bank data showed that the price of condominium units decreased by 9.4% year-on-year, a reversal of the 10.6% growth in the previous quarter and 8.3% increase in the previous year.
Duplex unit prices fell 48.1% in the third quarter, reversing a 27.1% increase in the second quarter and a 57.7% increase in the same period last year.
On the other hand, the prices of attached and/attached houses increased by 2.9% in the third quarter, faster than the 1.7% in the previous quarter but much slower than the 16.8% growth in the previous year.
City home prices rose 0.7% in the July to September period, a change from the 0.8% decline in the second quarter. However, it has slowed down from the 9.3% growth in the previous period.
Data from the BSP showed residential property prices in the National Capital Region (NCR) fell 14.6% in the third quarter, worse than the 1% drop in the second quarter and the 12.3% growth last year.
On the other hand, residential property prices outside the NCR (AONCR) increased by 3% in the period ending September, down from 4.2% and 14.3% in the second quarter and the year-ago period, respectively.
In the third quarter, residential mortgage loans issued for all types of new homes fell 15.7% year-over-year.
“Specifically, loans granted to NCR and AONCR decreased by 20.3% and 13% respectively,” the central bank said.
“Importantly, the double-digit annual contraction in residential mortgage loans in the Philippines, NCR, and AONCR in the third quarter of 2024 was significant, yet not as severe as the decline in housing loan availability during the crisis. , which started in the second quarter of 2020.”
BSP data also showed the estimated average price of new homes in the Philippines stood at P86,417 per square meter (sq.m.) in the third quarter.
The average estimated value in the NCR was P135,076 sq.m., while the average estimated value in areas outside the NCR stood at P60,804 per sq.m.
Chief Economist Rizal Commercial Banking Corp. Michael L. Ricafort said that the high prices compared to the rental properties had the necessary weight and led to a correction in the prices of residential houses.
Separate BSP data showed that the exposure of banks and trust companies to the real estate sector decreased 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 is also the lowest real estate exposure ratio recorded in five years or from 19.5% as of September 2019.
“The recent decrease could be mainly brought about by the ban on Philippine Offshore Gaming Operators (POGO) which led to the cancellation of POGO activities which led to higher vacancies and more supply of residential units for sale,” said Mr. Ricafort.
“As a result, prices and rents fell as the POGO ban effective December 31 approached,” he added.
In a recent report, Colliers said that Metro Manila’s condominium sector “continues to see a long period of remaining inventory.”
“This is forcing developers to take a more cautious approach and discourage new launches in the capital area,” he said.
Next year, Colliers said he expects prices to grow faster than rents. This will be driven mainly by the “continuing demand for luxury housing developments throughout Metro Manila.”
“Colliers sees high potential for snail-paced growth in rents and prices. From 2024 to 2026, we plan to return the rental price and rate between 2% and 2.5%.
“We expect rents and prices to return to pre-COVID levels by Q2 2028 and Q3 2029, respectively. The POGO sector is no longer the main driver of demand for office space in Metro Manila and its impact has spread to the condominium market as well.” – Luisa Maria Jacinta C. Jocson
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