By Kathleen A. Martin (The Philippine
Star) | Updated October 30, 2014 - 12:00am
MANILA, Philippines - There is still
no property bubble in the economy, although the Bangko Sentral ng Pilipinas
chief said there may be some segments in the real estate sector seeing a faster
increase in prices.
“There are certain segments in the
entire sector where prices or valuations may be rising too fast but overall, if
you look at the entire sector, you don’t see any clear evidence of a real
estate bubble,” BSP Governor Amando M. Tetangco Jr. said yesterday.
Banks’ exposure to the property sector
rose 22 percent to P1.097 trillion in June from the same period last year. This
was driven by a 21-percent climb in real estate loans to P924.317 billion and a
26-percent growth in investments in housing securities to P172.907 billion.
The BSP in July required banks to
undergo a separate stress test in order to assess the impact of their exposure
to the property sector once borrowers fail to service their loans.
In 2012, the central bank tightened
regulations in monitoring banks’ exposure to the property sector. Aside from
loans, banks have been required to report their investments in real estate
securities.
“We adopted measures mentioned, and
assess if they are sufficient. At this point in time, there is no plan to put
in place more measures,” Tetangco said.
“Prudential measures are not just
sector specific regulations.
Regulations implemented over the past
one or two years, including Basel 3 capital adequacy requirements, and recent
credit risk management framework, this also signal banks have to be prudent in
their lending operations,” he added.
Banks have also tightened lending
standards for real estate credit as its latest Senior Loan Officers Survey
showed, “a positive sign of ensuring health of the financial system,” Tetangco
said.
Tetangco recounted that amid an
increasing demand for housing and office space, major developers have been
taking measures so as not to see a repeat of the 1997 Asian Financial Crisis.
“Instead of all four towers being
started at the same time like what was done in the 1990s, construction is more
demand-dependent. They would construct one tower first, sell all of that, once
they achieve an acceptable level of sales, and there’s new demand, they would
start building the second tower,” Tetangco said.
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