January 24, 2018, 1:38 am
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Strong growth sustains demand for comm’l space

There is a strong domestic demand in the country for both residential and commercial properties supported by a big base of young and employed people, according to the Bangko Sentral ng Pilipinas.

Diwa Guinigundo, BSP deputy governor, said despite of a construction boom, there is still a “large shortage of housing units.”

“As the economy continues to grow, demand for commercial space will be sustained.  There is a strong domestic demand in the Philippines for both residential and commercial properties. We have a large shortage of housing units supported by a big base of young, employed people especially in the services sector,” Guinigundo said.

He stressed our real estate developers have become more prudent by doing due diligence of the market as they learned their lesson during the Asian financial crisis,” Guinigundo added.

“In fact some of them build on a pre lease basis. There are establishments which are willing to sign contracts for lease even before the actual construction of the building,” Guinigundo said.

“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.

On Friday, BSP data showed the residential real estate price index (RREPI) was nearly unchanged in the fourth quarter, allaying fears of an looming property bubble.

Residential real estate prices edged higher by 0.3 percent in the fourth quarter, as the RREPI rose to 113.9 from 113.6 for the same quarter a year ago. 

The slight year-on-year growth in residential real estate prices was slower compared to the 2.2 percent increase registered a quarter ago. 

While the growth in prices of townhouses accelerated to 6.2 percent from 4.9 percent in the third quarter year-on-year, those of condominium units slowed down to 1.8 percent from 3.1 percent in the previous quarter. 

Those of single detached units contracted by 1 percent from 2.4 percent rise in the previous quarter.

But the BSP stressed although a decline was noted in the average price of single detached units, the number of loans granted for this type of housing unit remained in an uptrend, registering a 7.2 percent growth from its year-ago level. 

The RREPI measures the average change in prices of various types of housing units covering single detached/attached house, duplex, condominium, and townhouse based on data from housing loans granted by banks.

Guinigundo said the growth in RREPI, which is a composite index of the residential price indices in the NCR and areas outside NCR, was due to the increase in the average residential prices in areas outside NCR by 1.7 percent, outweighing the decline in prices in NCR by 1.1 percent. 

The data also showed for the fourth quarter, about seven in ten real estate loans were for the purchase of new housing units or 70.5 percent. 

By type of housing unit, 48.1 percent of residential property loans were for condominium units, followed by single detached units at 43.9 percent and townhouses at 7.6 percent. 

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

By area, condominium units were the most common house purchases in NCR while single detached houses were dominant in areas outside NCR. 

By region, NCR accounted for 51.6 percent of the total number of residential real estate loans granted during the quarter, followed by CALABARZON at 25.6 percent, Central Luzon at 5.8 percent, Central Visayas at 4.7 percent, Western Visayas at 3.9 percent, Davao Region at 3.8 percent and Northern Mindanao at 1.5 percent. 

Together, these seven regions accounted for 96.9 percent of total housing loans granted by banks, BSP said.

Notably, these seven regions as well as SOCCSKSARGEN and the Cordillera Administrative Region (CAR) showed generally increasing trend in the number of loans granted since the second quarter of 2015.
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