Housing prices fell by 4.2 percent year-on-year in the first quarter, pulled down by a decline in the residential property prices in the National Capital Region (NCR) because of subdued demand during the pandemic, according to the Bangko Sentral ng Pilipinas (BSP).
The BSP’s first quarter Residential Real Estate Price Index (RREPI) showed that nationwide house prices also dipped by 1.6 percent quarter-on-quarter, in contrast to the fourth quarter 2020 increase in the RREPI of 2.4 percent.
“The 4.2 percent drop in the RREPI was primarily driven by the fall in prices of condominium units and duplexes,” said the BSP in a statement. The quarter-on-quarter contraction of 1.6 percent was attributed to the lower prices of duplexes, townhouses, and single detached/attached houses, which more than offset the higher prices of condominium units, it added.
The comparable RREPI in the first quarter 2020 was a positive 12.6 percent. The RREPI, used by the BSP to assess the real estate and credit market conditions, measures the average change in the prices of various types of housing units such as single detached/attached houses, duplexes, townhouses, and condominium units, based on bank loans.
The BSP said the negative year-on-year growth in home property prices was due to the downtrend of NCR property prices, down by 10 percent compared to same time last year of an 18.9 percent increase. This is the third straight quarter in a row that NCR housing prices have declined.
The BSP said the decline in NCR housing prices was “due to the decrease in the prices of condominium units which outweighed the increase in the prices of duplexes, single detached/attached houses, and townhouses.”
Housing prices in areas outside of the NCR, however, have continued its increase in a marked trend of buying property outside of Metro Manila during the pandemic and where there is less population.
Property prices in areas outside of the NCR went up by 0.8 percent year-on-year with prices of townhouses and condominium units leading the growth. This offset the decline in the prices of duplexes and single detached/attached houses.
On a quarter-on-quarter basis, house prices decreased by 0.8 percent in the NCR and it also fell in areas outside of the NCR by 2.1 percent.
“By type of housing units, the change in residential property prices is mixed,” according to the BSP.
Prices of duplexes during the quarter were down year-on-year by 20.7 percent, while prices of condominium units decreased by 10.7 percent. Prices of townhouses and single detached/attached houses increased by 8.3 percent and 0.2 percent, respectively.
“This is the third consecutive quarter that condominium prices declined, owing to the lackluster demand for condominiums in NCR,” said the BSP.
Banks’ residential real estate loans (RRELs) in the first quarter contracted by 14.7 percent year-on-year. It also fell 32 percent quarter-on-quarter. “A similar trend was observed in NCR and in areas outside of the NCR,” said the BSP.
The purchase of new housing units accounted for 79.5 percent of RRELs in the first quarter while by type of housing unit, most of the residential property loans were used for the acquisition of condominium units or 52 percent. Another 38.6 percent was accounted for by single detached/attached houses and 8.1 percent for townhouses.
The NCR got most of the RRELs and borrowers bought mostly condominium units, while RRELs granted in areas outside of the NCR were used to buy single detached/attached houses.
By region, the BSP said 48.4 percent of the total number of RRELs approved by banks were from the NCR, while the rest were distributed in areas outside NCR with CALABARZON taking the bulk at 25.4 percent.
The BSP said the average appraised value per square meter (sqm) of new housing units contracted by 13.6 percent year-on-year but expanded by 12.5 percent quarter-on-quarter. In both NCR and in areas outside the NCR, the average appraised value per sqm of new properties decreased year-on-year but improved on a quarter-on-quarter basis. “By type of new dwellings, duplexes and condominium units registered year-on-year decline in average appraised values per sqm while single detached/attached houses, duplexes, and townhouses posted quarter-on-quarter drop in average appraised values,” said the BSP.
The BSP explained that the weight of each type of housing unit in the RREPI is determined by dividing the total floor area in square meters of a specific type of housing unit over the total floor area of all housing types. “Hence, in the first quarter 2021, single detached/attached houses in the RREPI continued to constitute the largest weight at 47.3 percent. Meanwhile, condominium units, townhouses, and duplexes accounted for 28.6 percent, 23 percent and 1.2 percent, respectively,” said the BSP.
BSP Governor Benjamin E. Diokno said on June 17 that asset prices continue to be manageable and that the BSP is closely watching the property sector. The BSP imposes a cap on loan-to-value ratio, it has limits on real estate loans, and closely monitors banks’ real estate exposures. It also regularly conducts real estate stress tests.
Diokno said property prices remain “broadly in line with market fundamentals and within historical range” and that the “likelihood of asset price inflation due to a credit boom is also reduced by weak economic activity and banks’ risk aversion as these tend to dampen asset price movements and lending activity, respectively.”
Diokno also said that the BSP’s surveillance and monitoring of the real estate market “has been sharpened” and they have deployed “macroprudential tools to monitor and contain the potential buildup of risk arising from banks’ exposure to the property sector.” The BSP is currently preparing the maiden release of its first Commercial Property Price Index this year, to complement the RREPI. The new index will allow regulators to better monitor banks’ financial and real estate exposures.