The Metro Manila residential property market remains soft despite declining policy rates, as affordability constraints push homebuyers away from new condominium units and toward the secondary market, where speculators are offloading assets.

“The Metro Manila residential property market is undergoing a recalibration as demand softens and rental rates normalize following years of distortion driven by POGO [Philippine offshore gaming operations] premiums,” said Leechiu Property Consultants (LPC).

The firm noted that “While overall supply has stabilized, affordability constraints and subdued rent yields continue to shape buying behavior. Current transactions are concentrated in the secondary market and among developers offering targeted promotions.”

New launches and demand for residential units for the first 11 months of 2025 are at their lowest levels since 2020. This comes despite developers driving up primary unit sales by offering limited promotions and incentives.

Metro Manila’s condominium stock reached 775,400 units as of the first 11 months of 2025. LPC reported that 96 percent of ready-for-occupancy (RFO) units and 62 percent of pre-selling units have been sold.

The remaining unsold inventory—estimated at roughly 26,400 RFO units and 53,900 pre-selling units, equivalent to 3.5 years of supply—is heavily concentrated in the Upper Middle Income to Upscale segments, priced between ₱4 million and ₱12 million.

“This reinforces the widening affordability gap for the broader middle-income market,” said Roy Amado Golez Jr., LPC Director for Research, Consultancy, and Valuation.

Primary market demand remains subdued as speculative buying is still down, while end-users are increasingly shifting toward the secondary market, where pricing flexibility offers better value.

Developers are sustaining primary unit sales through promotional campaigns and limited incentives. However, motivated sellers—many of whom acquired units during the POGO-fueled property surge—are liquidating assets at competitive rates, directly competing with new launches and further slowing absorption.

Meanwhile, Golez stated that “Rental yields remain modest as current rents settle back to real market levels, correcting from POGO-driven premium rates that previously distorted market benchmarks. The inflated rents set unsustainable expectations across several CBDs.”

The nation’s housing backlog stood at 10.65 million units as of 2024, with persistent undersupply in low-income segments.

“Developers are aware of the backlog but they remain cautious about entering the low-income segment due to thin margins and compliance hurdles,” Golez said, concluding that this leaves affordability as a structural challenge.