SHDA sees mass housing output beyond 250,000 units a year

Published July 6, 2022, 5:12 PM

by Bernie Cahiles-Magkilat

Low cost mass housing developers in the country said the price ceiling adjustment on economic housing projects would encourage more companies to develop beyond the current 250,000-unit housing production a year and close the 6.5-million unit projected gap in housing supply by 2030.

George Siy, chairman of the Subdivision and Housing Developers Association (SHDA), the largest housing organization in the country, said after Department of Human Settlements and Urban Development (DHSUD) and National Economic and Development Authority (NEDA) signed the joint declaration on the adjustment of the price ceiling for economic housing from P1.7 million to P2.5 million.

Socialized housing and economic housing segments account for around 85 percent of the country’s total housing backlog, which is projected to reach 6.5 million units by 2030.

If neglected, Siy said it is expected that the housing need of the Philippines will hit over 22 million by 2040. To close the gap, Siy said, the industry needs to greatly increase production beyond the approximate 250,000 houses a year being achieved today.

“The adjustments in the price ceiling of economic housing have taken into consideration the income and affordability of home buyers aside from costs of inputs to production. Thus, it will have positive repercussions for housing as more homes are developed,” he said.

SHDA believes that increasing the price ceiling attracts more developers to produce units under economic and socialized housing, an essential strategy that will help address the housing backlog in the country.

The private sector welcomed this move as it had earlier espoused the adjustments in the price ceiling, which needed to be aligned with economic events in the last six years, given substantial increases in costs for all the inputs to production, i.e., land, labor, transport, construction materials, and other costs of doing business.

These inflations grew due to increased worldwide economic activities, logistic bottlenecks, currency depreciation, and political events like sanctions on international trade.

Correspondingly, the DHSUD issued Department Order 2022-03 last June 10, 2022. Implementing the adjustment shall apply to new projects to be launched; while for projects with existing licenses to sell, the new price ceiling will be applied to unsold and yet unconstructed economic housing units only.

In terms of the role of the new resolution to the economic upturn, Siy also reiterated that the housing sector is an economic pump-primer as it contributes a 3.4 percent output multiplier to the economy, related with some 80 allied industries, involving all sectors, including women, children, vulnerable groups, and health. It generates substantial direct employment with an average of 120 plus man-days for each basic house unit to be constructed, an average of 5 percent of the country’s total employment can be addressed. Added to this are the indirect employment generated by backroom support, marketing, and salespeople involved in housing activities.

Furthermore, SHDA, together with other housing organizations, has been meeting and working with the DHSUD and NEDA in the determination of the adjustments in the price ceiling for socialized housing, after the adjustments were made on economic housing.

This takes into consideration increases in the last four years in costs of inputs, as well as income and affordability of the population, especially those that belong to the lower 30 percent of the strata.

Mass housing was also retained and included in the Tier I of the 2022 Strategic Investments Priority Plan (SIPP), a list of priority economic activities, that are entitled to tax incentives including income tax holiday for a certain period, granted under the CREATE Law.