MANILA, Philippines — Property prices recovered in the fourth quarter of last year after a weak performance in the third quarter due to uncertainties brought about by the pandemic, according to the Bangko Sentral ng Pilipinas (BSP).
Despite the steady drop in the prices of condominium units, data released by the BSP showed the country’s residential real estate price index (RREPI) inched up by 0.8 percent to 134.4 percent in the fourth quarter of last year from 133.3 in the same quarter in 2019.
“House price growth reverted to the positive territory,” the BSP said.
Launched in the first quarter of 2016, the RREPI booked its first year-on-year decline when it slipped by 0.38 percent to 131.2 in the third quarter from 131.7 in the same quarter in 2019 due to the impact of the pandemic.
The RREPI, used as an indicator for assessing the real estate and credit market conditions in the country, increased by 2.4 percent quarter-on-quarter.
The BSP said residential property prices in the National Capital Region slumped for the second straight quarter as it contracted by 4.8 percent in the fourth quarter, while prices in areas outside NCR went up by 5.9 percent.
ING Bank Manila senior economist Nicholas Mapa said the ongoing exodus pushed up housing prices for larger units, with Filipinos heading outside the metropolis to seek refuge from suffocating city lockdowns.
“The Philippines is mirroring the global exodus from major cities, with city dwellers trading their flats for the clean and green of the suburbs outside the concrete jungle,” Mapa said.
Data showed the price of duplexes nationwide rose by about 20 percent to 178.3 from 148.6, followed by the price of townhouses, which increased by 16.1 percent to 169.7 from 146.2, and that of single detached or attached units, which inched up by 4.7 percent to 116 from 110.8.
On the other hand, the price of condominium units declined by 8.4 percent to 160 in the fourth quarter of last year from 174.6 in the same quarter in 2019 as the COVID-19 pandemic resulted in the suspension of operations including those of Philippine offshore gaming operators (POGOs).
The BSP said the slowdown in residential real estate loans granted for all types of new housing units nationwide eased to 3.6 percent in the fourth quarter after plunging by 43.3 percent in the third quarter as banks remained risk averse due to concerns about the capacity to borrowers to pay amid uncertainties caused by the global health crisis.
In the fourth quarter of last year, the purchase of new housing units accounted for 83.4 percent of total residential real estate loans. Most were used for the acquisition of condominium units with 42.2 percent, followed by single detached or attached houses with 30.5 percent and townhouses with 26.9 percent.
The BSP raised the loan limit to the real estate sector by universal and commercial banks to 25 percent of total loan portfolio from the previous 20 percent in August last year to free up P1.2 trillion for lending to the sector.
Despite the 2.4 percent contraction in bank lending in January, disbursements to the real estate sector increased by 5.7 percent to P1.76 trillion and accounted for 19.7 percent of the total loans.
In its latest industry analysis, Regina Capital Development Corp. said the exposure of the banking sector to the real estate sector is still at comfortable and manageable levels.
“Given how the pandemic has impacted nearly every industry, the banks will likely be more focused on striking a balance between reviving loan appetite and keeping exposure at a manageable level,” Regina Capital analyst Paola Beatrice Lopez said in the report.
Article and Photo originally posted by Inquirer last March 27, 2021 12:00am and written by Lawrence Agcaoili.