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Philippine government has been curbing housing shortage since 2012 after the demand
has reached an astonishing 1.3 Million, alarms has been detected before by housing
organizations and real estate experts subsequent supply starts to decline from 220,756 to
200,124 units constructed based in 2009 record of HLURB Licensed to sell (LTS) database,
figures that hasn’t given much importance at the time for banks implements tights
borrowing policies and real estate developers just want to loosen up the real estate market
from over heating and most companies recuperates from the effect of world wide economic
crisis that brought down investments in chaos, The aftermath of the collapse of sub-prime
mortgage crisis known as the “housing bubble” in the US in 2008 affects economies world
wide, the slump that brought by the Financial Crisis alters the perceptions on the stability
of real estate market as a secured investment. Meanwhile in the Philippines, the supply of
affordable homes in the country hasn’t keeping up with the demand since then, creating a
vacuum for real estate market to breath and that trigger a renewed demand that benefit
the Philippines Real Estate going to its 9th successive year growth according to Global
Property Guide. Recent industry report; “Impact of Housing Activities on the Philippine
Economy" jointly completed by the Center for
Research and Communication of the University of
Asia and the Pacific (CRC-UAP) and Subdivision
and Housing Developers Association (SHDA), the
backlog have reached at 6.7 million in 2015, plus
with the new housing need for the growing
Philippine population rate of 1.84% per annum
(2000-2015 PH growth rate) and with a
household size of 4.4 (Philippine Statistics
Authority), approximately the additional demand
for the period 2016 to 2030 will reached 7.27
Million. HLURB record on housing production rate is unstable with the drop of 25.57% from
274,545 in 2017 to 204,344 units in 2018. With the production rate between; 200,000 to
250,000 per year will only results to an accumulated production of 3.15 million in 15 years
and the Philippine Statistics Authority only shows 20 thousand to 30 thousand every
quarter year of building permit applications for residential construction assuming 100%
occupancy rate and for 15 years getting the average would add up to only 1.5 Million.
Without much more effort from the Philippine government and intervention from private
sectors and institutions. The country would still needs a total of 9.32 million houses to
break-even, meeting 10 years earlier Philippine goal “Ambition Natin 2040” - decent house
for every Filipino household”
Basically, demand in housing is based on the household’s security of tenure and mostly on
how a growing family adjusts into their housing consumption given that places them in
equilibrium, if the equilibrium has not meet; modification of existing units, relocating to a
bigger or adding another unit become an option to meet satisfaction and comfort for the
certain household,. As the trends continue the demand on housing rises but requires
enthusiasm, there desire to own and the actions from these consumers. Other factors that
affect the demand of housing are the price of lot & house, its affordability, the availability
of flexible financing options and household income, without these factors the lack of
housing supply won’t fuel the demand among consumers. External forces such as war and
natural calamities, also the expiration of the life-span of a housing unit contributes
additional demand. Existing government bureaucratic efforts; its lending institutions,
financial intermediaries and guarantee entities were effective but inefficient, for it suffers
liquidity delays and rigid unnecessary documentation requirements that supposed to be an
inter-agency transaction that minimizes the cost and reduce processing time. Government
existing programs and the creation of (Housing and Urban Development Coordinating
Council (HUDCC) to administer the key housing agencies; National Housing Authority
(NHA), National Home Mortgage and Finance Corporation (NHMFC), Home Development
Mutual Fund (HDMF), Housing and Land Use Regulatory Board (HLURB), and Home
Guaranty Corporation (HGC) helps curb housing problems, situations does not confined
only on providing affordable financing and household income transfer thru government
subsidiaries like Pag-Ibig Fund or, giving access to affordable housing and security of
tenure. Government should address the housing problem with the broader context. And
give emphasize on the demand side and
especially the supply side of housing problems to
create the better framework.
The 2015 research on The Philippines Housing
reveals a huge gap in housing supply vs.
demand despite government efforts, private
partner’s enthusiasm, and foreign assistance on
the housing programs, the seven digit housing
disparity is still almost unchanged. Analyzing the
demand side of housing quandary, on the socio
economic aspects; most household has a limited
source of income for their housing consumption. As of 2019 the ceiling price of a decent
low cost house with 21 to 24 sqm is P480, 000, for a worker which has the daily wage of
P350 in the suburb provinces. The housing price is 380x (380%) of its yearly wages,
likewise for the socialized house costing P700, 000 is 555x or 555%. Considering the
ceiling price of an economic housing at 1.7 million, do the math will give 879x, or 87.9
percent of the annual income of a regular employee earning an income of P537/day or
161,100 per year, (a salary almost equal or a little greater than Ph GDP per Capita/ year),
which financial analyst would view as unaffordable considering the average expenditures of
a Filipino household is P267, 000 per year based on 2015 surveys. Comparing to Hong
Kong and Singapore average house price to GDP per Capita of 65.59x and 25.96x
respectively., (source: Global Property Guide) were the real estate markets were two of
the most expensive in the world.
The Philippine real estate is becoming a buying-spree for Filipinos working in other
countries with the higher GDP/capita and savings, for foreigners with dual citizenship, for
expats with SRRV Visa, for foreign workers with
diplomatic errand like the Chinese and rich
Filipinos with dispensable income, owning
multiple properties and taking advantage of the
undeveloped Philippine real estate rental
market. Transforming prime residential
condominiums of Metro Manila into empty
boxes. “The market has been characterized by
record completions in supply, rising vacancy
[rates] and declining yields, while capital values
for these properties have “plateaued” or
increased at a slower rate” Colliers International points out from its research in 2017.
Only a low-cost model house unit is the only most affordable shelter to own by an average
Filipino family without affecting the budget for the household basic needs and their
standard of living. The house price to income ratio is expected to rise given the cost of
construction materials does not deviates much with the nations nominal inflation
fluctuations between 2% and 4% a year (2016
to 2019) or by linear estimation using the
Philippine housing Index projection will result to
more or less 4% per annum.
A regular employee benefits and wages are flat
for the country’s wages is hardly regulated and
couldn’t keep up for their housing needs that by
working overseas is the best option to belong to
a class of society that could afford such housing
price. The class of buyer that belongs to the
higher middle class which at present represents the highest percentage of buyers of the
sales generated from real estate sales. The housing conditions in the country come at a
price that a few middle income household can afford. Financing options presented by real
estate developers, private financing institution and Pag-Ibig aren’t much attractive since
the current levels of disposable income won’t allow the lower middle-income class to
allocate some amount for housing for it will consequently lower their current standard of
living. Housing ownership hysteria is not only a subject matter for the under privilege,
informal settler families and low income families but also for the middle class families
because the Philippine average housing price
increase at 15% per year, condominium and
high end housing prices in urban cities
especially in Metro Manila increases 36% per
year one of the highest in Asia based on the
study of Habitat for Humanity and World
Bank. Thanks to BSP for regulating country’s
financing institutions by maintaining the
economy buoyant, lowering interest rates;
maintaining affordability level of real estate
for middle earner consumers.
The speculative projected growth of real estate prices by economic managers cause by
housing demand continues to escalate even though it doest cater its desired market. This
makes Philippine real estate especially high-end housing in a bubble, but sustainable. Its
ability to remain buoyant benefits the real estate builders, land owners and developers.
Thus, housing is more a business for financial gain and less philanthropy works for
government’s private partners. That, for a Filipino family’s dream of owning a house is a
race for its affordability. Middle income families or the working class finds it difficult to own
a dwelling unit within the comfort distance from their working places because of the
shortage on the availability of land for residential, housing development in highly urban
areas and high cost of land. The case reflects the demand side of housing dilemma. The
soaring rate increase in land prices is a major factor in house price appreciation.
(Strassman and Blunt 1993; Ballesteros
2000; Grimes 1976). International rule
housing for a low income family of 100 sqm
lots should cost a little more or less as GNI
per capita of a country. In the case of the
lands outside Metro Manila like in Bacolod
City where the raw land along outstretch of
the urban centers is more or less the prices
reaches 1000/sqm. Doing the math results
to 0.20 times of the country GNI per capita
(Ph GNI/capita $10,000, 2017), somewhat
feasible but when subdivided and developed
it further raised 5.3 to 6.7 its original value. Say at present for example (Bacolod City) a
suburb lot in a developed subdivision with the area of 100 sqm price now at 5000/sqm.
Price/ (GNI/capita) = 1.0 x GNI, which prove accurate. Acquisition of agricultural land is
somewhat a longer process because of the conflicting procedures among government
agencies and the government’s lacks of centralized regional processing centers, the prices
rises further to 2.5 to 3 times once converted and zoned for urban use. (Studied by World
Bank and UNCHS). However analysis centers on the average class or middle class as a
whole, for the parameters used are base on middle values or the average values specified
in the economic indicators; GDP, GNI. The classes below middle will suffer most by the
escalating value of land and houses, since analysis shows the middle class is already within
the threshold and existing housing projects does not cater the prevailing market that is the
Middle income class. The risk on housing program not to realize exist till the Philippine
ambition to become middle class society is realize thru wealth accumulation and
distribution by enactment of policies programs and constant monitor of the country’s
progress in achieving development goals.
Problems of the housing shortage is the
availability of land for housing cause by
lack of allocation for residential and
urban development, the system of
permitting procedure and conflicting of
interest among government agencies.
Think Tank Center for Housing and
Independent Research Synergies in a
research study housing developers
currently have to go through 27 offices
to secure 78 permits and 146
signatures, for a total of 373
documents. Agencies such as the local government unit, the Department of Agriculture,
Department of Agrarian Reform, Department of Environment and Natural Resources,
Bureau of Internal Revenue, and Housing and Land Use Regulatory Board (HLURB), among
others. The creation of Department of Human Settlement and Urban Development
(DHSUD) involves a paradigm shift in the approach to public housing as a solution to the
housing backlog. It would introduce housing in government lands suitable for development
and construction of medium-and high-rise buildings using centrally located government
lands, so beneficiaries in the inner city would be better served. Singapore is the best model
for this, and the government be certain on its mission; exert effort and allocate the bigger
pie for housing program from the 0.07 percent of 2019 National Budget.
The Government’s programs on Housing was still in the transition for the implementation
of its new policies, rules and regulations from the enactment of Republic Act 11201. The
outcome is yet to be determine in a few years.
has reached an astonishing 1.3 Million, alarms has been detected before by housing
organizations and real estate experts subsequent supply starts to decline from 220,756 to
200,124 units constructed based in 2009 record of HLURB Licensed to sell (LTS) database,
figures that hasn’t given much importance at the time for banks implements tights
borrowing policies and real estate developers just want to loosen up the real estate market
from over heating and most companies recuperates from the effect of world wide economic
crisis that brought down investments in chaos, The aftermath of the collapse of sub-prime
mortgage crisis known as the “housing bubble” in the US in 2008 affects economies world
wide, the slump that brought by the Financial Crisis alters the perceptions on the stability
of real estate market as a secured investment. Meanwhile in the Philippines, the supply of
affordable homes in the country hasn’t keeping up with the demand since then, creating a
vacuum for real estate market to breath and that trigger a renewed demand that benefit
the Philippines Real Estate going to its 9th successive year growth according to Global
Property Guide. Recent industry report; “Impact of Housing Activities on the Philippine
Economy" jointly completed by the Center for
Research and Communication of the University of
Asia and the Pacific (CRC-UAP) and Subdivision
and Housing Developers Association (SHDA), the
backlog have reached at 6.7 million in 2015, plus
with the new housing need for the growing
Philippine population rate of 1.84% per annum
(2000-2015 PH growth rate) and with a
household size of 4.4 (Philippine Statistics
Authority), approximately the additional demand
for the period 2016 to 2030 will reached 7.27
Million. HLURB record on housing production rate is unstable with the drop of 25.57% from
274,545 in 2017 to 204,344 units in 2018. With the production rate between; 200,000 to
250,000 per year will only results to an accumulated production of 3.15 million in 15 years
and the Philippine Statistics Authority only shows 20 thousand to 30 thousand every
quarter year of building permit applications for residential construction assuming 100%
occupancy rate and for 15 years getting the average would add up to only 1.5 Million.
Without much more effort from the Philippine government and intervention from private
sectors and institutions. The country would still needs a total of 9.32 million houses to
break-even, meeting 10 years earlier Philippine goal “Ambition Natin 2040” - decent house
for every Filipino household”
Basically, demand in housing is based on the household’s security of tenure and mostly on
how a growing family adjusts into their housing consumption given that places them in
equilibrium, if the equilibrium has not meet; modification of existing units, relocating to a
bigger or adding another unit become an option to meet satisfaction and comfort for the
certain household,. As the trends continue the demand on housing rises but requires
enthusiasm, there desire to own and the actions from these consumers. Other factors that
affect the demand of housing are the price of lot & house, its affordability, the availability
of flexible financing options and household income, without these factors the lack of
housing supply won’t fuel the demand among consumers. External forces such as war and
natural calamities, also the expiration of the life-span of a housing unit contributes
additional demand. Existing government bureaucratic efforts; its lending institutions,
financial intermediaries and guarantee entities were effective but inefficient, for it suffers
liquidity delays and rigid unnecessary documentation requirements that supposed to be an
inter-agency transaction that minimizes the cost and reduce processing time. Government
existing programs and the creation of (Housing and Urban Development Coordinating
Council (HUDCC) to administer the key housing agencies; National Housing Authority
(NHA), National Home Mortgage and Finance Corporation (NHMFC), Home Development
Mutual Fund (HDMF), Housing and Land Use Regulatory Board (HLURB), and Home
Guaranty Corporation (HGC) helps curb housing problems, situations does not confined
only on providing affordable financing and household income transfer thru government
subsidiaries like Pag-Ibig Fund or, giving access to affordable housing and security of
tenure. Government should address the housing problem with the broader context. And
give emphasize on the demand side and
especially the supply side of housing problems to
create the better framework.
The 2015 research on The Philippines Housing
reveals a huge gap in housing supply vs.
demand despite government efforts, private
partner’s enthusiasm, and foreign assistance on
the housing programs, the seven digit housing
disparity is still almost unchanged. Analyzing the
demand side of housing quandary, on the socio
economic aspects; most household has a limited
source of income for their housing consumption. As of 2019 the ceiling price of a decent
low cost house with 21 to 24 sqm is P480, 000, for a worker which has the daily wage of
P350 in the suburb provinces. The housing price is 380x (380%) of its yearly wages,
likewise for the socialized house costing P700, 000 is 555x or 555%. Considering the
ceiling price of an economic housing at 1.7 million, do the math will give 879x, or 87.9
percent of the annual income of a regular employee earning an income of P537/day or
161,100 per year, (a salary almost equal or a little greater than Ph GDP per Capita/ year),
which financial analyst would view as unaffordable considering the average expenditures of
a Filipino household is P267, 000 per year based on 2015 surveys. Comparing to Hong
Kong and Singapore average house price to GDP per Capita of 65.59x and 25.96x
respectively., (source: Global Property Guide) were the real estate markets were two of
the most expensive in the world.
The Philippine real estate is becoming a buying-spree for Filipinos working in other
countries with the higher GDP/capita and savings, for foreigners with dual citizenship, for
expats with SRRV Visa, for foreign workers with
diplomatic errand like the Chinese and rich
Filipinos with dispensable income, owning
multiple properties and taking advantage of the
undeveloped Philippine real estate rental
market. Transforming prime residential
condominiums of Metro Manila into empty
boxes. “The market has been characterized by
record completions in supply, rising vacancy
[rates] and declining yields, while capital values
for these properties have “plateaued” or
increased at a slower rate” Colliers International points out from its research in 2017.
Only a low-cost model house unit is the only most affordable shelter to own by an average
Filipino family without affecting the budget for the household basic needs and their
standard of living. The house price to income ratio is expected to rise given the cost of
construction materials does not deviates much with the nations nominal inflation
fluctuations between 2% and 4% a year (2016
to 2019) or by linear estimation using the
Philippine housing Index projection will result to
more or less 4% per annum.
A regular employee benefits and wages are flat
for the country’s wages is hardly regulated and
couldn’t keep up for their housing needs that by
working overseas is the best option to belong to
a class of society that could afford such housing
price. The class of buyer that belongs to the
higher middle class which at present represents the highest percentage of buyers of the
sales generated from real estate sales. The housing conditions in the country come at a
price that a few middle income household can afford. Financing options presented by real
estate developers, private financing institution and Pag-Ibig aren’t much attractive since
the current levels of disposable income won’t allow the lower middle-income class to
allocate some amount for housing for it will consequently lower their current standard of
living. Housing ownership hysteria is not only a subject matter for the under privilege,
informal settler families and low income families but also for the middle class families
because the Philippine average housing price
increase at 15% per year, condominium and
high end housing prices in urban cities
especially in Metro Manila increases 36% per
year one of the highest in Asia based on the
study of Habitat for Humanity and World
Bank. Thanks to BSP for regulating country’s
financing institutions by maintaining the
economy buoyant, lowering interest rates;
maintaining affordability level of real estate
for middle earner consumers.
The speculative projected growth of real estate prices by economic managers cause by
housing demand continues to escalate even though it doest cater its desired market. This
makes Philippine real estate especially high-end housing in a bubble, but sustainable. Its
ability to remain buoyant benefits the real estate builders, land owners and developers.
Thus, housing is more a business for financial gain and less philanthropy works for
government’s private partners. That, for a Filipino family’s dream of owning a house is a
race for its affordability. Middle income families or the working class finds it difficult to own
a dwelling unit within the comfort distance from their working places because of the
shortage on the availability of land for residential, housing development in highly urban
areas and high cost of land. The case reflects the demand side of housing dilemma. The
soaring rate increase in land prices is a major factor in house price appreciation.
(Strassman and Blunt 1993; Ballesteros
2000; Grimes 1976). International rule
housing for a low income family of 100 sqm
lots should cost a little more or less as GNI
per capita of a country. In the case of the
lands outside Metro Manila like in Bacolod
City where the raw land along outstretch of
the urban centers is more or less the prices
reaches 1000/sqm. Doing the math results
to 0.20 times of the country GNI per capita
(Ph GNI/capita $10,000, 2017), somewhat
feasible but when subdivided and developed
it further raised 5.3 to 6.7 its original value. Say at present for example (Bacolod City) a
suburb lot in a developed subdivision with the area of 100 sqm price now at 5000/sqm.
Price/ (GNI/capita) = 1.0 x GNI, which prove accurate. Acquisition of agricultural land is
somewhat a longer process because of the conflicting procedures among government
agencies and the government’s lacks of centralized regional processing centers, the prices
rises further to 2.5 to 3 times once converted and zoned for urban use. (Studied by World
Bank and UNCHS). However analysis centers on the average class or middle class as a
whole, for the parameters used are base on middle values or the average values specified
in the economic indicators; GDP, GNI. The classes below middle will suffer most by the
escalating value of land and houses, since analysis shows the middle class is already within
the threshold and existing housing projects does not cater the prevailing market that is the
Middle income class. The risk on housing program not to realize exist till the Philippine
ambition to become middle class society is realize thru wealth accumulation and
distribution by enactment of policies programs and constant monitor of the country’s
progress in achieving development goals.
Problems of the housing shortage is the
availability of land for housing cause by
lack of allocation for residential and
urban development, the system of
permitting procedure and conflicting of
interest among government agencies.
Think Tank Center for Housing and
Independent Research Synergies in a
research study housing developers
currently have to go through 27 offices
to secure 78 permits and 146
signatures, for a total of 373
documents. Agencies such as the local government unit, the Department of Agriculture,
Department of Agrarian Reform, Department of Environment and Natural Resources,
Bureau of Internal Revenue, and Housing and Land Use Regulatory Board (HLURB), among
others. The creation of Department of Human Settlement and Urban Development
(DHSUD) involves a paradigm shift in the approach to public housing as a solution to the
housing backlog. It would introduce housing in government lands suitable for development
and construction of medium-and high-rise buildings using centrally located government
lands, so beneficiaries in the inner city would be better served. Singapore is the best model
for this, and the government be certain on its mission; exert effort and allocate the bigger
pie for housing program from the 0.07 percent of 2019 National Budget.
The Government’s programs on Housing was still in the transition for the implementation
of its new policies, rules and regulations from the enactment of Republic Act 11201. The
outcome is yet to be determine in a few years.
by: Eugene Catalan
Posted: August 2019
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