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Philippine housing market loses steam -- report

Posted on December 14, 2014 11:05:00 PM [ BusinessWorld Online ]

HOUSING prices in the Philippines and most of Asia continued to rise in the third quarter -- albeit at a softer pace, said residential research firm Global Property Guide, while noting a percolating property market elsewhere in the world.

In its report released over the weekend, Global Property Guide said third-quarter housing prices in the Makati Central Business district rose by an annual 3.58%, slower than the 10.83% increase seen in the same period last year. Quarter on quarter, Makati housing prices registered a 2.43% uptick.

The “key factors” for the deceleration were interest rate increases, the central bank’s restrictions on mortgage loans and slower economic growth, according to Matthew Montagu-Pollock, publisher of Global Property Guide.

“Any growth slowdown will moderate housing demand,” he said in an e-mail on Sunday. “Rapid economic growth means more money in people’s pockets, and means they can afford more housing -- and a slowdown means the opposite.”

The country’s gross domestic product growth was an annualized 5.3% in the previous quarter, moderating from 6.4% in the second quarter and 7% in the same July-September period last year.

The report also cited data from the Housing and Land Use Regulatory Board, which showed that applications for residential building licenses during the first eight months of the year were “virtually flat,” inching up by just 0.3% from a year earlier.

“At the lower end, there have been a lot of sales of properties to OFWs (overseas Filipino workers) in locations where it is not clear that there is ‘real’ demand,” Mr. Montagu-Pollock said.

The report monitored 10 Asian markets: the Philippines, Taiwan, Indonesia, Thailand, Hong Kong, Vietnam, South Korea, Japan (Tokyo), China (Beijing) and Singapore.

“Eight of the ten Asian markets saw house prices rise during the year to Q3 2014. However, house price increases were at most modest,” the report read.

China’s once booming property market has slowed significantly by 3.83% in the same period, while that of Singapore skid 4.79%.

“Because many housing markets are now considered overvalued, Asian governments in particular are imposing cooling measures to avoid a repeat of the past,” Global Property Guide said.

But Mr. Pollock pointed out: “I don’t believe that housing is excessively expensive in Manila, since in inflation-adjusted terms it is still below its pre-1997 peak.”

In the US, house price rises are decelerating sharply, as residential construction activity cools, the report said.

However, housing markets in much of the rest of the world are “rising faster than before.”

On a global scale, Dubai in the United Arab Emirates remained the “star performer” for the seventh consecutive quarter, even as property price increases there decelerated to an average of 23.73% in the third quarter.

One market where property continues to be expensive: UK.

“Nationwide house prices [in UK] rose by 8.95% y-o-y in Q3 2014, a sharp improvement from an annual increase of 1.47% in the previous year and the second biggest increase since Q4 2004,” the report read.

“The wider context is that the global house price boom continues,” Global Property Guide said. -- Daphne J. Magturo           

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