Expanding affordable financing schemes, developing public-private partnerships to build housing, and lowering rental rates are three ways to help solve the shortage of affordable housing, Lamudi Philippines said in a report on Tuesday.
“The dream of having a home of their own is one common aspiration shared by all Filipinos but as the rise of property prices continue to shoot up this goal is becoming more and more elusive most especially to low-income earners,” Lamudi said.
To address the housing ownership challenge faced by many Filipino families, the online property listing and services firm recommended that action be taken in three areas.
“The first step to putting housing within reach is easier finance schemes and lower interest rates especially for the poor and the marginalized,” Lamudi said.
Under the most recent revision of the Pag-IBIG Fund’s financing programs, the lowest interest rate offered is 5.5 percent for a one-year fixed pricing period. Other plans offer 6.5 percent for three years; 7.27 percent for five years; 8.035 percent for 10 years; 8.585 percent for 15 years; 8.8 percent for 20 years; 9.05 percent for 25 years; and 10 percent for 30 years.
Lamudi suggested that the best interest rates were out of reach for most buyers, noting that to qualify for the lowest 5.5-percent rate through Pag-IBIG, a borrower must have a monthly amortization that is 30 percent or less of the borrower’s gross monthly income, and the ratio of the loan amount to the appraised value of the collateral must not exceed 75 percent.
Lamudi added, “One major worry is the full risk-based pricing framework that the Fund has recently adopted.
This means that the interest rates will only be fixed on the assigned period and might go higher or lower depending upon the prevailing market rates.” Lamudi did note, however, that since Pag-IBIG initiated the scheme, it has actually lowered its rates five consecutive times.
The property listing site said that according to a study by the Housing and Urban Development Coordinating Council (HUDCC), “the affordability of housing has been adversely affected by out-of-control urbanization and unplanned urban sprawl where demand for residential land far outstrips the available supply of land, particularly in densely populated areas.”
To help remedy this, Lamudi urged that private investors “engage more proactively in the national agenda,” and suggested that public-private partnerships to develop housing might be one solution.
“With the government and the private sector sharing ideas and working together, planning for future developments of a city that will include more low-cost housing will be made much easier,” Lamudi said.
Lamudi noted that this did present some greater challenges, however, as “the only listed example of public and private cooperation under property development in the portal of the Public–Private Partnership Center of the Philippines is the Pabahay sa Riles Project, which can be recalled as not exactly a success.”
Lamudi also recommended developing an idea first raised by Vice President and former HUDCC chief Leni Robredo, a public rental housing program that could allow workers and families to live closer to their workplaces while allowing them to save money for an eventual home purchase.
Lamudi cited statistics that showed 33 percent of the Philippines’ urban population are renters, while another 17 percent share housing. “Through helping this big chunk of the market, this might be the way to not only help future homeowners save but also address the issue of informal settlements in key urban areas.” Lamudi said.