RESIDENTIAL property prices slightly grew in the fourth quarter of 2016 from a year earlier, falling in Metro Manila but buoyed by higher prices in areas outside Metro Manila, central bank data showed.
According to the Residential Real Estate Price Index (RREPI) report released by the Bangko Sentral ng Pilipinas (BSP) over the weekend, residential property prices from October to December last year increased slightly by 0.3 percent from a year earlier.
“Residential real estate prices edged higher by 0.3 percent in Q4 2016 as the RREPI rose to 113.9 from 113.6 for the same quarter a year ago,” the BSP said in a statement.
By type of housing unit, townhouses posted the highest year-on-year growth in prices at 6.2 percent, followed by condominium units at 1.8 percent.
Meanwhile, prices of duplexes and single detached/attached housing units dipped by 12.3 percent and by 1 percent, respectively.
“The growth in RREPI, which is a composite index of the residential price indices in the NCR [National Capital Region] and AONCR [Areas outside NCR], was due to the increase in the average residential prices in AONCR by 1.7 percent in Q4 2016, outweighing the decline in prices in NCR by 1.1 percent,” it said.
The BSP did not explain as to why the overall prices dropped in Metro Manila but data showed that by type of housing unit, there is a faster rate of increase in prices of duplexes and condominium units in AONCR compared to those of NCR.
Meanwhile, the prices of townhouses increased, while the prices of single detached/attached housing units dipped in both NCR and AONCR.
BSP Deputy Governor Diwa Guinigundo said the latest RREI showed there is a strong domestic demand in the Philippines for both residential and commercial properties.
“We have a large shortage of housing units supported by a big base of young, employed people especially in the services sector,” he said.
As the economy continues to grow, he noted that demand for commercial space would be sustained.
“At the same time, real estate developers have become more prudent by doing due diligence of the market as they learned their lesson during the Asian financial crisis,” he pointed out.
One sign of developers’ caution, Guinigundo noted, is a trend towards pre-leasing office space before construction even begins.
“There are establishments which are willing to sign contracts for lease even before the actual construction of the building,” he said.
“Most important, this very strong sign that economic growth is not confined in the national capital region,” Gunigundo said, noting that a construction boom is seen in areas such as Cagayan de Oro and Iloilo.
For his part, Bank of the Philippine Islands (BPI) Vice President and lead economist Emilio Neri Jr. said increasing global and domestic interest rates could impact residential property prices going forward.
“We expect these modest increases in prices of the index and price declines in some segments to continue as benchmark interest rates continue their uptrend,” he said.
Neri stressed that the gradual increases in global and domestic interest rates should prove healthy over the medium term as it helps assure that a Philippine property bubble becomes a less probable outcome.
By region, the NCR accounted for 51.6 percent of the residential real estate loans granted in the fourth quarter of 2016, followed by Calabarzon (25.6 percent), Central Luzon (5.8 percent), Central Visayas (4.7 percent), Western Visayas (43.9 percent), Davao Region (3.8 percent), and Northern Mindanao (1.5 percent).
The index also showed that about seven out of 10 residential real estate loans granted were for the purchase of new housing units.
By type of housing unit, about 48.1 percent of residential property loans were for condominium units, followed by single detached units (43.9 percent), and townhouses (7.6 percent).
By area, condominium units were the most common house purchases in the NCR while single detached houses were mostly acquired in AONCR. The RREPI measures the average changes in the prices of different types of housing units over a period of time across different geographical regions, and the growth rate the index records indicates price inflation, the central bank said.
It is computed as a weighted chain-linked index based on the average appraised value per square meter weighted by the share of floor area of housing units. Besides the overall index, sub-indices have also been constructed for the different types of housing units, such as single, duplex, apartments, and residential units.
The BSP said the index could serves as a measure to assess trends in real estate and credit market conditions in the country.