Real estate risks need closer scrutiny

Even as the Philippine banking system has remained resilient, the International Monetary Fund (IMF) said risks in the real estate sector and consumer credit still require closer monitoring and could prompt the central bank to intervene.

“Financial stability risks remain contained. The banking system has sufficient liquidity and capital buffers, and nonperforming loans (NPL) are low,” an IMF spokesperson said.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed the banking industry’s NPL ratio eased to a three-month low of 3.3% in March.

“However, parts of the commercial real estate sector have seen persistently high vacancies and falling rents, and NPLs for housing loans remain elevated,” the IMF said.

Property consultant Colliers Philippines expects the vacancy rate for residential property in Metro Manila to hit 26% by yearend, while office vacancies are projected at 22% this year amid condominium oversupply and slow take-up of unsold units.

The BSP in its latest Financial Stability Report noted the “rising NPLs in the real estate sector.”

The NPL ratio for residential real estate was at 6.82%, while commercial real estate NPLs were 2.18% as of September 2024. The bulk (62.5%) of the real estate loan portfolio consists mostly of commercial loans.

The BSP also earlier said the mid- and low-cost housing segments, which account for a large part of residential real estate loans, have driven the rise in NPLs.

Consumer loans are also another area that the BSP needs to keep an eye on, the IMF said.

“The rapid growth in consumer credit, though a relatively small portion of banking assets, warrants close monitoring,” it said.

BSP data showed outstanding loans of universal and commercial banks rose by 11.8% to P13.19 trillion in March from a year ago.

Consumer loans to residents increased by 23.6% in March to P1.64 trillion, mainly due to the 28.8% jump in credit card loans to P959.43 billion.

The central bank must also be prepared to step in, when necessary, the multilateral institution said.

“The BSP should be ready to adjust macroprudential policy in line with developments in the financial cycle to preempt the buildup of vulnerabilities,” the IMF said.

In the same Financial Stability Report, the BSP said that the financial system’s real estate loan exposure will require “closer monitoring amid evolving market conditions.”

Banks’ real estate exposure ratio rose to 19.75% as of end-December from 19.55% at end-September.

This as total investments and loans extended by Philippine banks and trust departments to the real estate sector grew by 5% to P3.31 trillion as of end-December from P3.15 trillion in 2023.

The BSP monitors lenders’ exposure to the real estate industry as part of its mandate to maintain financial stability.

Source: Business World

Travel choices of Filipinos influenced by social media trends

According to a study by travel booking platform Klook, 89% of Filipinos select their travel destinations based on social media popularity, surpassing the regional average of 79%.

“We know that social media is a huge factor in really driving people to book their travel purchases,” Klook Philippines General Manager Michelle Ho said in a press briefing.

The 2025 Travel Pulse research, which has 7,000 respondents, showed that Filipinos use Facebook (84%) as their top source of information for travel inspiration, followed by YouTube (73%), TikTok (69%), and Instagram (63%).

The study added that quick travel content in the form of photos (67%) and short-form videos (62%) is the type of posts that attract most Filipinos. On the other hand, travelers use long-form videos (48%) and in-depth blog posts (45%) for deeper research on the destination and tours.

Ms. Ho noted that although TikTok is the third most popular application among travelers, Filipinos are two times more likely to engage with the platform’s videos. 

Klook also reported a 20% increase in Q1 2025 versus Q4 2024 on its Kreator-generated sales. 

Vietnam, for example, has experienced a 157% increase in revenue for tourism services and products made on Klook after content creators posted their travels. 

“Social media has played a huge role in elevating the popularity of Sapa,” Ms. Ho said.  “We’ve seen a triple-digit growth for Filipinos travelling to Vietnam these days.”

Apart from Vietnam, the study revealed that Taiwan and Thailand are also experiencing a rise in Filipino tourists, with 120% and 78% growth in 2024 versus 2023, respectively. 

For domestic travel, Ms. Ho shared that Manila remains the top destination for weekend getaways, while Tagaytay, Boracay, Cebu, and Bohol are popular destinations. 

Surigao and Siargao have also been gaining traction and popularity recently, the Klook executive said.

“What’s interesting is that you’ve got your core destinations, rising in terms of popularity, and at the same time, lesser-known destinations are being talked about,” Ms. Ho said.  

“And we’re actually paying close attention to that, because we feel that in the next few months, this could really rise in the tourism industry,” she added.

Source: Business World

Housing policy lags as 28% of Filipino families are now in extended households

The Philippine government should reform its housing policies as more Filipinos live with extended families — a sign that traditional family structures are shifting, according to the Philippines Institute for Development Studies (PIDS).

About 29% of Filipino households are no longer the traditional nuclear type, as more relatives resort to cohabitation to share in housing and other costs, PIDS Supervising Research Specialist Tatum P. Ramos told a recent webinar.

“They have decided to join their relatives in a household to gain support in growing their own family or [to manage] living and housing expenses,” she said, based on a PIDS statement released on Wednesday.

A PIDS paper cited the significant link between wealth and the likelihood of living in extended households.

“An extended family setup offers a resource-sharing opportunity and provides support for working young female adults who may not necessarily have the same amount of time for household management activities as before,” PIDS said.

Rising housing prices, especially in Metro Manila and in key cities, have forced households to share living spaces with relatives, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said.

“[There’s also the] lack of mass transport or train systems that would allow more Filipinos to live farther from central business districts to nearby provinces where housing is cheaper,” he added.

“The low attainability of housing in the Philippines is resulting in lower household formation with the rise of extended and multi-family arrangements and nonfamily housing arrangements (living alone or living with nonrelatives),” Ms. Ramos and her co-authors Marife M. Ballesteros and Jenica A. Ancheta said in the study.

“Government efforts to address this issue through a market-driven strategy should be reviewed, and housing affordability issues have to be closely examined,” they added.

Housing prices in the Philippines rose 6.7% in the fourth quarter of 2024 from a year earlier, according to the Bangko Sentral ng Pilipinas.

Mary Racelis, who teaches anthropology at the University of the Philippines, said housing policies should go beyond abstract models to address the lived experiences of the bottom 60% of the population — those who are underserved and priced out of formal housing markets.

She cited the need to understand the poor’s economic conditions to help design sustainable and inclusive housing plans.

“We should recognize that the informal settlers are not the problem, they are the solution,” she told the webinar, adding that informal settlers are not mere passive aid recipients.

Despite the wide membership of housing funds like the Home Development Mutual Fund (Pag-IBIG), the uptake of government assistance for housing finance remains limited, said Kevin Godoy, chief development specialist at the Department of Economy, Planning, and Development.

“Only 4% have government assistance as a financing source… considering that Pag-IBIG had 16 million members in 2024,” he pointed out.

He cited the importance of transport infrastructure, noting that long commutes rather than urban congestion alone are a major barrier to homeownership and household formation.

Mr. Godoy also sought the creation of a national rental housing program.

“We’re the only country in Southeast Asia that does not have a national program on public rental,” he said, noting how local governments have been left to experiment with rental solutions on their own in the absence of a national framework.

The Philippines faces a housing deficit of 6.5 million units, which could rise to 22 million by 2040 if not addressed, according to the United Nations Human Settlements Program.

Source: Business World