The government should adopt a more integrative approach to affordable housing as strengthening collaborations and exploring novel solutions can help increase access of low-income and poor households, according to a study of the Philippine Institute for Development Studies (PIDS).
In a recent webinar organized by PIDS, the featured study titled “Measuring housing affordability in the Philippines” tackled housing affordability using the residual income method and the 30-percent affordability standard.
The authors noted that the widely used 30-percent price-to-income ratio is not a suitable standard measure of housing affordability in the Philippines.
The report pointed out poor and low-income households are not able to afford housing priced at 30 percent of their income, while the middle income to rich are able to afford housing priced at more than 30 percent of their income.
“It (30-percent price-to-income ratio) is used in developed countries where there is a low poverty incidence and a significant proportion of middle-income families; that is not the case in the Philippines,” said Marife Ballesteros, PIDS vice president and study co-author.
Based on Philippine Statistics Authority data, 47 percent of households in the country have low income and 20 percent are economically vulnerable.
Given the housing affordability problem in the country, the report highlighted that the government must undertake reforms to prevent speculative increases in land and residential prices and to reexamine the role of the public sector in the delivery of affordable housing.
The former would involve adopting a standard valuation of land and real estate properties; the effective implementation of idle land tax by all local government units (LGUs) and regulation on borrowings such as financial ceilings on household debt to income ratio and other anti-speculative measures, the study said.
On the other hand, the report said government provision of affordable housing would require an overhaul of the housing subsidy programs and creation of a public housing fund to finance direct subsidies to households, public sector construction of affordable housing (for rent or ownership) and housing support in times of disaster.
“At the town or city level, Community Development Funds anchored to municipal councils should be established to support housing projects arising from urban renewal or upgrading or other urbanization challenges,” it said.
According to Rowena Dineros, officer-in-charge-director of the Department of Human Settlements and Urban Development (DHSUD) Public Housing and Settlements Service, the country has a 6.5 million housing backlog that could reach the 10 million mark in 2028.
From 2021 to June 2022, DHSUD produced 294,142 housing units, while the National Housing Authority provided housing assistance to 85,174 families.
A discussant at the webinar, Dineros shared that aside from socialized housing projects, DHSUD works closely with LGUs to develop a Local Shelter Planning (LSP) manual to guide them in responding to the housing demand.
She explained that the LSP considers a municipality’s terrain, hazards and resources, such as land, time and funds, to identify at-risk shelters, housing projects and relocation sites in times of disaster. It is a valuable tool for planning and executing housing plans for any LGU, according to Dineros.
“(The LSP manual) suggests that the potential percentage of household monthly income that can be used for housing should not exceed 20 percent. It can be lower than 20 percent, especially for the lower-income group,” she said.
Fellow discussant Santiago Ducay, executive director of the Subdivision and Housing Developers Association, said government subsidies such as land could be provided to make housing even more affordable for low-income households.
“The determination of the right type of subsidies is very crucial because ‘over subsidy’ — or if it is very easy for the beneficiaries to acquire housing — also makes it easy for them to let go of these facilities,” he added.
Winston Conrad Padojinog, president of the University of Asia and the Pacific and a discussant at the webinar, suggested exploring new ways to address the housing gap.
These include shifting from housing ownership to long-term leases or rights, considering labor exchange as a form of payment for poor households, and streamlining the housing development permit application.
“It takes at least a minimum of two years for a land to be finally converted (into) housing units available to the market. That alone contributes to the costs of housing,” Padojinog said.
