The Philippine residential market experienced challenges in the third quarter of 2024, marked by a significant slowdown in property launches and rising inventory levels, according to Leechiu Property Consultants (LPC).
LPC director for research and consultancy Roy Golez highlighted in a recent briefing that sales stabilized at about 7,000 units per quarter, reflecting a nearly 50-percent decline from pre-pandemic levels of 13,000 to 15,000 units.
Launches declined significantly, while unsold inventory level rose to a 29-month high.
Sales and demand
Golez identified several key factors contributing to the downturn, including elevated interest rates at 6.5 percent, global economic uncertainties and a shift in buyer preferences toward properties in nearby provinces.
As a result, new project launches fell 39 percent in the third quarter of 2024, reaching just 2,145 units—the lowest since the pandemic began. Before COVID-19, launches typically ranged between 8,000 and 9,000 units per quarter.
Inventory levels thus surged to 67,000 units across 510 buildings, the highest since the pandemic and now at a 29-month high. Of these units, 32 percent are currently available, while 68 percent are pre-selling. Prior to the pandemic, inventory levels stood at around 30,000.
Quezon City leads with the highest unsold stock at 18,500 units, followed by Ortigas with 13,600 units, Bay Area with 10,500 units and Manila with 8,500 units. Ready for occupancy (RFO) units, which property developers are now actively marketing, comprise 79 percent of the 790,000 units available in the market.
“What developers are doing right now is re-selling and re-marketing their unsold inventory,” Golez said.
Golez, however, expressed cautious optimism on potential rate adjustments, which may boost launches and sales.
Buyer preferences
Golez observed a noticeable shift in buyer behavior, with growing interest in properties outside Metro Manila, particularly in developing townships.
The trend suggests that buyers are seeking more affordable and spacious options away from the capital. Improving infrastructure and economic development in Laguna, Cavite and Batangas are also attracting homebuyers.
“Changing buyer preferences and rising interest rates have slowed demand for residential condominiums in Metro Manila,” Golez said. “However, the market is poised for a rebound as inflation eases and interest rates decline, driven by anticipated further BSP rate cuts.”
Outlook
The broader economic landscape adds to the uncertainty, influenced by geopolitical factors and currency fluctuations. While the gross domestic product is still projected to grow by 6 percent in 2024, external pressures could complicate recovery in the residential sector.
The evolving dynamics in the Metro Manila residential market underscore the need for a balanced approach as the industry navigates opportunities and risks ahead.
Looking ahead, there is cautious optimism that easing interest rates could stimulate the market by making financing more accessible. However, stakeholders must carefully navigate these challenges to adapt to the changing market landscape.
