Residential real estate prices went up 4.9 percent in the fourth quarter of 2021 versus 0.8 percent same period in 2020 due to “sustained demand” for new townhouses and condominium units with the easing of mobility restrictions and gradual resumption of business activity.
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According to the central bank’s Residential Real Estate Price Index (RREPI), residential property prices rose five percent year-on-year in areas outside of the National Capital Region (NCR) and up by 5.1 percent in NCR.
Townhouses and condominium units drove the year-on-year growth in property prices and offseting the decline in the prices of duplex housing units and single-detached/attached houses.
On a quarter-on-quarter basis, RREPI increased by 1.1 percent because of the higher prices of duplex housing units, single-detached/attached houses, and condominium units. Housing prices in the NCR rose by 2.6 percent but fell 1.2 percent in areas outside of the NCR during the quarter.
The BSP said on Friday, March 25, they were not surprised with the rising housing property prices at end 2021 as results were consistent with the Consumer Expectations Survey (CES) which also showed a “higher percentage of consumers preferring to buy real estate property during the last quarter of 2021.” The CES indicated that 16.8 percent of Filipino households plan to buy a house and lot in the fourth quarter 2021, which was up from 12.7 percent in the same survey period in 2020.
Contributing to the 4.9 percent year-on-year growth in residential property prices, townhouses’ prices increased by 22.6 percent while condominium unit prices rose by 10.4 percent, mostly in areas outside of the NCR. Meantime, prices of duplex housing units and single-detached/attached houses contracted by 10.2 percent and 1.1 percent, respectively.
The BSP said residential real estate loans (RRELs) for new housing units went down by 11.5 percent year-on-year but increased by two percent on a quarter-on-quarter basis.
As of end-2021, the average appraised value of new housing units was P74,347 per square meter (sqm). As BSP explained, the average appraised value per sqm is the simple average of all reported appraised values of properties based on RRELs.
The NCR average appraised value per sqm stood at P115,235 while both the national average and areas outside of NCR average is at P49,905.
“The weight of each type of housing unit in the RREPI is determined by dividing the total floor area (in sqm) of a specific type of housing unit over the total floor area of all housing types. In Q4 (fourth quarter) 2021, single-detached/attached houses in the RREPI continued to constitute the largest weight at 51 percent. Meanwhile, condominium units, townhouses, and duplex housing units accounted for 27.5 percent, 21 percent, and 0.6 percent, respectively,” said the BSP.
About 73.5 percent of RRELs were borrowed to buy new housing units, the rest were used to purchase pre-owned properties. Of the 73.5 percent, loans used for the acquisition of condominium units accounted for 44.6 percent, followed by single-detached/attached houses with 39.3 percent and townhouses with 15.6 percent.
Most of the RRELs granted in the NCR were for the purchase of condominium units, while RRELs granted in the AONCR were for the purchase of single-detached/attached houses, said the BSP.
By region, the NCR accounted for 40.1 percent of RRELs, while 27.9 percent were borrowers from CALABARZON and 12 percent from Central Luzon. Another 4.7 percent were accounted by borrowers in Central Visayas , Western Visayas with 4.4 percent, Davao Region with four percent, and Northern Mindanao with 1.6 percent. “NCR and the said six regions combined accounted for 94.7 percent of total housing loans granted by banks,” said the BSP.
The central bank first released RREPI in 2016 and used actual data on mortgage loans. The BSP said the RREPI is an indicator for assessing the real estate and credit market conditions and to help the BSP review policies after determining asset prices’ trends.
Asset prices affect volatility in the general price levels and economic output and could also dictate BSP’s policy actions which, in turn, will affect the movements and behavior in the property market since policy rates influence credit financing.