Banks and its trust units’ real estate exposures as of end-June this year dropped to 19.92 percent compared to 20.80 percent same period in 2023 in terms of share in the banking system’s total loan portfolio minus interbank loans.
The overall ratio was also lower versus the previous quarter's (end-March) 20.31 percent, based on Bangko Sentral ng Pilipinas (BSP) data.
In actual loan numbers, the industry’s real estate exposures went up by 3.4 percent year-on-year to P3.156 trillion as of end-June compared to P3.052 trillion in 2023. These are the combined real estate loans (REL) and real estate investments (REI) of banks and its trust departments.
As of end-June, total REL stood at P2.785 trillion, up 7.24 percent from same time last year of P2.597 trillion. The REI was at P371.108 billion, down 22.56 percent from P454.856 billion last year.
During the period, bank proper REL accounted for bulk of the loans at P2.782 trillion.
Real estate exposures as residential REL as of end-June totaled P1.043 trillion while commercial REL amounted to P1.742 trillion. Both numbers were higher than end-June 2023 data of P958.192 billion and P1.639 trillion.
REI are debt and equity securities. As of end-June, real estate exposures as debt securities totaled P245.313 billion which was lower than the previous year’s P294.558 billion. Equity securities amounted to P125.795 billion versus P160.298 billion last year.
Based on the latest Residential Real Estate Price Index (RREPI) of the BSP, house prices continued to rise in the second quarter this year. Residential property prices increased by 2.7 percent year-on-year from April to June, a slower rate of increase than the first quarter’s 6.1 percent.
The RREPI, which is used as an indicator for assessing the real estate and credit market conditions in the country, noted that residential property prices in the National Capital Region (NCR) contracted by one percent in the second quarter as the prices of single-detached/attached houses declined, and outweighing the increase in the prices of townhouses and condominium units.
By contrast, residential property prices in areas outside of the NCR rose by 4.2 percent during the period, driven by the price increases in duplex housing units, single-detached/attached houses, and condominium units.
Meanwhile, the BSP said the number of residential real estate loans (RRELs) for all types of new housing units fell by 3.5 percent year-on-year in the second quarter.
About 78.7 percent of RREL transactions were used to buy new housing units.
In 2020, the BSP eased the rules on banks’ real estate loan limits and increased it to 25 percent from 20 percent. This is to encourage bank lending to households for the acquisition or construction of a residential real estate property.