VICE President Leni Robredo, in her role as head of the Housing and Urban Development Coordinating Council (HUDCC), recently issued a challenge to the country to address the rapidly growing crisis in low- and middle-income housing.
Citing government data, Robredo pointed out that by the end of this year, the shortage of affordable housing will balloon to about 5.7 million units. To catch up with the backlog, the Philippines will need to build about 2,600 new homes every day for the next six years.
That alarming statistic does not even take into account the future housing needs of our growing population. Even if that completely impossible task could be accomplished, at the end of the six years, there would still be a deficit of several hundred thousand homes.
The situation becomes even more alarming when one considers that a ‘housing unit’ is actually home to a family; the average family size in the Philippines is about five people. That means 28 million people potentially do not have adequate housing in this country – and given Filipinos unique penchant for including parents, in-laws, other relatives and domestic help in their households, the number is very likely much higher.
Although Robredo’s speech lacked some details, she did touch on the basic reasons why the housing gap has been allowed to grow so large.
From the private sector point of view, affordable housing is unattractive; a house or condo unit that is sold for only P1.5 million obviously generates a smaller income for a builder than one that can be sold for P10 million. Even those developers who recognize there is a huge, largely untapped market for affordable housing — and there are a number of developers who do — find it difficult to make that business as profitable as building for the higher-end market, because the difference in revenue has to be made up in volume, which puts an often insurmountable strain on the company’s capabilities.
From the government’s point of view, meeting the need for affordable housing has been made difficult by years of policy inattention; agencies to address the problem have been created, and the issue has always been given sufficient lip service, but a strong, comprehensive policy has never been given the priority it deserves. And developers have complained that bureaucracy and red tape make the process to launch an affordable housing project unattractive.
In her speech, Robredo recognized the need for the government to encourage rather than discourage the private sector by offering, at a minimum, the incentive of a trouble-free process, and perhaps even some tax or other economic inducements instead. That is a good perspective.
By the same token, so was her call to the private sector to be a bit more socially aware, and be willing to take a chance on developing affordable housing. The market for high-end housing is not limitless, after all, and even if they individually do not represent the same level of buying power, the households of the affordable housing market vastly outnumber the high-income ones.
Building homes and communities to meet their needs taps a huge pool of wealth, creates jobs and creates new businesses and services at a much faster rate than high-end development. And it also creates potential future customers for the builders as well.
Taking the call to tackle the affordable housing gap seriously and making it a key priority will bring nothing but great economic and social benefits to the country, and should be given full support by both the government and private sector.