Residential developers have launched fewer condominium units in Metro Manila as the high interest-rate environment presents significant hurdle among home buyers, according to Leechiu Properties Consultants (LPC).
LPC research and consultancy director for residential market Roy Golez said in a news briefing the residential market showed an apparent slowdown in Metro Manila condominium take-up and launches in the first quarter of 2024
“Based on our tracking of pre-selling, we have been seeing declines in both pre-selling vs. developer launches,” Golez said.
Metro Manila slowdown
Golez said only four condominium projects were launched in the first quarter, comprising 2,708 units. This was 38 percent down from the last quarter.
Reservation sales or take-up also declined 35 percent, with only 6,928 units sold, weighed down by elevated interest rates and geopolitical uncertainties.
He said the sales take-up and project launches started to decline when the government raised interest rates from 6 percent to 6.5 percent.
Most of the residential launches in Metro Manila cater to the upscale market, which has been the most resilient sector of the industry in the face of high interest-rate environment.
Prices of upscale units average from P7 million to P12 million.
Buyers are also attracted to the luxury and high-end condominiums as these projects show consistent capital appreciation.
Golez said despite the decline in sales and launches, most developers have ready projects for launching this year once the market starts to pick up.
Growth continues
Golez said despite the slowdown in Metro Manila, LPC still sees the residential market sustaining its growth because of the continued big demand for housing.
“We have very young population average age of 24 years old, and we have high employment rate. We are also seeing widening gap of new housing demand outside Metro Manila because key infrastructure projects are nearing completion, particularly in CALABARZON,” he said.
He also cited the Bangko Sentral ng Pilipinas data which showed an increase in residential real estate loans (RRELs) over the past year.
Most of residential loans were for projects outside the National Capital Region, which Golez said, indicates that demand is continuing to move outside the metropolis.
“There is a widening gap between the number of loans granted in NCR and in areas outside NCR which started during the pandemic,” Golez said.
Projects outside Metro Manila also tend to be more affordable for buyers and have more spacious residential units within township developments that offer the convenience of living in a larger city.
Infrastructure developments enable these townships more connectivity with major cities and other townships projects.
Stricter screening measures
Golez noted that property developers, particularly those that cater to the middle market, are applying stricter screening measures to ensure buyers are capable of paying their loans and reduce cancellations.
“During the pandemic, we saw high attrition rate or back outs, particularly in the middle market, so the developers are starting to introduce stricter screening for their projects,” Golez said.
Developers during the pandemic extended deadline for submission of documents and offered special promotions or payment terms to attract buyers.