Vol. XXII, No. 66 [ BusinessWorld Online ]
Monday, October 27, 2008 | MANILA, PHILIPPINES
BY JHOANNA FRANCES S. VALDEZ, Reporter
EVEN AS property consultancies like Jones Lang Lasalle Leechiu and Richard CB Ellis project that the sector will ride out the spreading financial crunch till next year, the government regulator has admitted it expects the industry to be affected should the crisis drag on for the long term.
"We are expecting a slowdown on the purchasing power of consumers, in which case their priorities would shift. Their focus would be on food and clothing, they will no longer prioritize becoming owners of their own houses," Zacarias A. Abanes, director of policies and programs of the Housing and Urban Development Coordinating Council said in a recent phone interview.
Among others, Mr. Abanes said his agency is bracing for a possible reduction in the number of overseas Filipino workers (OFWs), who comprise the main market of property developers but who could be displaced as recession hits developed economies that hire them.
Mr. Abanes added that the agency will "be working with DoLE [Department of Labor and Employment] to provide livelihood assistance to the unemployed and those who want extra income, so that they will be able to afford to have their own homes."
Asked if they expect a default in paying loans, Mr. Abanes said, "The newly signed loan restructuring program should provide a leeway for the payers, so we are not expecting a full-blown default, but definitely, amortization will be affected," he said.
Congress recently approved a measure to extend the payment period of housing loans contracted from government financial institutions and housing agencies.
Prince R. Cruz, senior economist at Global Property Guide, said in a separate phone interview that "the bulk of low-income housing projects are bought by OFWs, and we are expecting a slowdown of hiring in Europe, the US and the Middle East. Therefore there should be a slowdown in the launch of new housing projects. I’m not sure if there will be a total standstill, some projects might push through, but they will not be as strong as last year."
"Also, we expect a dramatic slowdown in lending. Since Philippine banks are expected to decrease lending to developers, developers also are not inclined to lend much to the housing sector," Mr. Cruz added.
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