CEBU CITY—Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said no asset bubble is occurring in the Philippines despite the 9.2 percent increase in residential real estate prices in the first quarter from 5.5 percent a year ago.
Bangko Sentral released the maiden nationwide Residential Real Estate Price Index over the weekend. The first-quarter growth was also significantly higher than the 5.1-percent expansion in the fourth quarter of 2015.
“While we believe that there’s no real estate bubble right now, we want to continue to monitor the property sector. So the residential real estate price index will help us do that,” Tetangco said during the 12th annual media lecture of Bangko Sentral held at Crimson Resort in Mactan, Cebu.
Tetangco said there was no cause for alarm in the acceleration of prices of condominium units.
“Not at all. They’ve somewhat slowed down in building. And [in] some of the movements in each of the sectors, there’s some that have increased slowly than others. We want to look at the total picture. At this point in time, if you look at other indicators like building permits, there’s no bubble,” Tetangco said.
Deputy Governor Diwa Guinigundo said the “9.2-percent growth in the first quarter showed a vibrant housing industry in the Philippines,” adding “this is the complete snapshot of the housing sector.”
The index showed real property prices in the National Capital Region and areas outside it increased 9.7 percent and 9.4 percent, respectively.
Condominium units posted the highest year-on-year growth in prices at 12.9 percent, followed by townhouses at 8.5 percent.
“More demand for condo units is evident in Metro Manila because most urban workers prefer to stay in the city during weekdays rather than go home everyday and brave the heavy traffic… Distance is a very vital reason,” Guinigundo said.
The index showed that about 7 out of 10 residential real state loans granted were for the purchase of new housing units. Condo units were the most common house purchases in the capital region and single-detached houses in areas outside it.
By region, NCR accounted for half or 50.4 percent of the residential real estate loans granted in the first quarter 2016, followed by Calabarzon at 28.4 percent, 7.6 percent in Central Luzon, 3.8 percent in Visayas, and 3.3 percent in Central Visayas.
Guinigundo said the index could serve as a measure in assessing the trends in housing prices.
Bangko Sentral required universal, commercial and thrift banks to submit bank quarterly report on residential real estate loans granted for the generation of the index.
Out of the 109 banks covered, 93 banks or 85.3 percent—consisting of 40 commercial and 53 banks—submitted their reports to Bangko Sentral during the first quarter of 2016.
The construction of the price index based on banks’ approved housing loan applications is a first in the country and is expected to provide a tool in assessing the real estate and credit market conditions in the Philippines. The index only covered the NCR earlier.
Guinigundo said the index measured the average changes in the prices of different types of housing units over a period of time across different geographical regions where the growth rate of the index measures house inflation.
