Real estate prices ease in second quarter — BSP

Real Estate

HOME PRICES declined in the second quarter, with costs to acquire single units down a tenth from a year ago, the Bangko Sentral ng Pilipinas (BSP) announced over the weekend.

Housing prices dropped by 4.6% in April-June, marking the first time in two years that overall property costs slid since the central bank’s residential real estate price index (RREPI) started in the second quarter of 2015. This compares to a 1.2% increase recorded in January-March and the 11.6% surge in prices posted in 2016’s second quarter.

The RREPI measures the average change of home prices across building types and locations, enabling the central bank to assess overall real estate and market conditions and detect any bubble forming in the property sector.

It was cheaper to buy homes in the provinces in the three months to June as prices posted an 8.2% decline from a year ago, according to central bank data.

On the other hand, those who bought houses in Metro Manila paid 2.5% more on average.

By type of structure, single detached/attached houses actually saw costs drop by 9.9% nationwide, offseting increases in the prices of other residential units. The price decline came after a modest 0.3% growth posted the previous quarter and an 18.7% surge a year ago.

Single homes in Metro Manila saw prices drop by 6.1%, while those located in the provinces fell by 10.3%.

Prices of duplex units inched up by 5.1% across the country, although the increase was much bigger at 11.9% for those within the National Capital Region (NCR). In the provinces, price tags for duplexes rose by 7.2%.

Condominium units also posted an overall 5.1% price increase, led by a 7.1% pickup in the provinces and a milder 5.2% increase in Metro Manila.

Meanwhile, overall prices of townhouses added 2.9% from a year prior, with a 5.5% increase in the provinces offsetting a 0.9% decline in Metro Manila.

Central bank officials previously noted that there remained strong demand for commercial and living space in the Philippines, rendering property price adjustments reasonable and allaying fears of a bubble.

A bubble forms due to a perceived rising demand for housing units that drives developers to build more, and is said to “burst” as demand stagnates, leading to an abrupt drop in property prices that could jolt the banking system.

The BSP currently limits a bank’s real estate exposure to 20% of its total loan portfolio.

Condos are largely preferred among Metro Manila residents, while single detached units are favored by those in areas outside the NCR.

The BSP said most bank property loans were secured by those in NCR, followed by those in Calabarzon (Cavite-Laguna-Batangas-Rizal-Quezon), Central Luzon, Central Visayas, Western Visayas, Davao Region and Northern Mindanao.

Last Sept. 22, the central bank announced tighter reporting standards by requiring banks to submit more detailed data on property loans and project financing. Fitch Ratings said the new rules would give the regulator a more comprehensive view of the property sector.

Banks have extended P1.644 trillion in property loans as of end-June, which accounts for 20.79% of their total loan portfolio, according to BSP data. A third of the loans were extended to retail clients, while two-thirds went to commercial borrowings.

Roughly 75% of real estate loans went to the purchase of new homes, with singe detached units and condominiums accounting for 45.3% and 44.8%, respectively.

Source: http://bworldonline.com/real-estate-prices-ease-second-quarter-bsp/