The Bangko Sentral ng Pilipinas (BSP) on Tuesday dismissed fears that an asset bubble was developing in the country, saying
that increasing incomes and robust remittances from overseas Filipino workers (OFWs) are fueling rising demand in the property market.
Cyd Tuano-Amador, BSP assistant governor for the monetary policy sub-sector, said that the Philippines has a growing population that is enjoying increasing incomes, which is fueling the demand for housing.
Speaking on the sidelines of the Asia Finance Summit held at the Raffles and Fairmont Makati City on Tuesday, Tuano-Amador said there has been a shift in the way people look at the property sector, especially from OFWs, because a residential property is the largest asset that any household can own.
“They [OFWs] they have to find investment vehicles,” Tuano-Amador said. “What we saw was there was some correction in the prices of residential properties in 2009 to 2010.”
According to the official, “There was an increase in prices in residential and office space but it’s not as if it’s getting ahead of itself.”
She assured that there are no signs yet of an asset bubble forming in the country.
“We’re not seeing signs of that [asset bubble]yet,” she said.
Among the signs of an asset bubble are massive defaults on housing loan payments and a glut in property developments.
Earlier, the central bank said it was monitoring and determining whether acceptable credit standards are being maintained by banks with respect to their exposures to real estate in order to prevent a property bubble from forming.
BSP data as of June 2013 showed that banks’ real estate exposure remained manageable at P900.1 billion, up by 6.8 percent compared to their exposure in the preceding quarter.
Of the P900.1 billion exposure, 84.7 percent was in the form of real estate loans while the remaining 15.3 percent were in the form of real estate investments.
In the third quarter of 2013, residential real-estate loans surged by 23 percent, pushing the consumer lending of universal, commercial and thrift banks to grow by about 17 percent in the same period to P702 billion.