Pandemic drives up costs of PHL socialized housing projects

THE PANDEMIC has driven up the production costs of socialized housing while the sector continues to face gaps in affordability and quality, the Subdivision and Housing Developers Association, Inc. (SHDA) said.

“The pandemic highlighted the urgency to address persistent vulnerabilities in the housing sector, such as housing affordability and quality gaps, particularly among low-income households,” SHDA President May Rodriguez said in an e-mail.

“But to address these vulnerabilities, the government should first introduce measures to remedy the increasing housing production costs — land, labor, construction materials, and cost of doing business, that the economic crisis has accelerated.”

The wholesale prices of construction materials in Metro Manila hit a nearly three-year high in November before slowing down slightly a month after, when mobility restrictions were relaxed, government data showed.

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The Construction Materials Wholesale Price Index for the National Capital Region eased to 5.2% year on year in December 2021, compared to 5.4% in November.

Socialized housing will need to be a budget priority for the next government after the current funding emphasis on transportation and public works projects, Institute for Leadership, Empowerment, and Democracy Executive Director Zy-za Nadine Suzara recently said.

She had noted that the average share of housing in the national budget between 2016 and 2022 was about 0.3%, compared to infrastructure projects that account for nearly a quarter.

According to real estate services firm JLL Philippines, the overall residential market saw a slowdown in business activity during the pandemic.

“This was more felt in the socialized to low-end segments where a large number of units were returned to the market, with buyers pulling out from deals as they shift priorities and step away from big ticket purchases,” JLL Philippines Research Manager Karisse Garcia said in an e-mail.

But fewer units were being returned towards the end of last year, indicating a gradual recovery, she added.

As it gears towards recovery, SHDA is working with the government in identifying land that can be used for public housing, Ms. Rodriguez said.

“As the Philippines charts the path towards economic recovery, there is renewed momentum for increased investment in socialized housing,” she said.

“But to sustain this, the government should encourage the participation of the local government units, the private developers, and the communities themselves in conceptualization, identification of sites, and implementation of socialized housing programs.”

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JLL’s Ms. Garcia said public-private partnerships could speed up the recovery of the sector.

“This is what was seen in several affordable housing projects launched during the pandemic such as Basecommunity, Tondominium and Binondominium in Manila City, as well as Uswag low-rise residential building in Iloilo, which came into fruition with the partnership of the different LGUs with private developers,” she said.

“Focus on socialized housing will need to be brought up to the national level with key government bodies getting their hands on the initiative.” — Jenina P. Ibañez

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The article was originally published in Business World.

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