Growth in home prices eased in Q2

Home prices in the Philippines rose at a slower pace in the second quarter, as a high interest rate environment tempered demand for housing loans, the Bangko Sentral ng Pilipinas (BSP) reported.

Nationwide costs of various types of new housing units—as measured by the residential real estate price index (RREPI)—went up by 2.7 percent year-on-year in the three months through June, easing from the 6.1 percent annualized increase recorded in the first quarter.

But on a quarter-on-quarter basis, home prices grew slightly faster at 1.8 percent than the 1.1-percent sequential jump recorded in the January-March period.

The RREPI is a measure of the average change in the prices of shelters based on banks’ data on actual mortgage loans granted to acquire new housing units. This quarterly gauge, however, excludes pre-owned or foreclosed properties.

By housing type, condominiums registered the highest year-on-year growth rate at 10.6 percent in the second quarter, followed by a 1.7-percent growth in single-detached/attached houses. Meanwhile, the cost of townhouses contracted by 0.8 percent.

BSP data showed the slower annual increase in prices of new shelters coincided with weak demand for home loans. In the second quarter, the number of housing loans granted by banks contracted by 3.5 percent year-on-year, a reversal from the 8.9-percent increase recorded in the preceding three months.

Quarter-on-quarter, home loans sagged by a bigger 15.1 percent, an indication that the economy continued to absorb the previous anti-inflation interest rate hikes of the BSP.

Easing cycle

Banks use the BSP’s policy rate as a guide when charging interest rates on loans. By making borrowing costs more expensive, the BSP wants to temper strong demand for commodities with limited supply. This, in effect, tames inflation.

But with inflation easing back to within the 2 to 4 percent target range of the central bank, the BSP in August kicked off its easing cycle with a quarter point cut to the policy rate, which is now at 6.25 percent. And Governor Eli Remolona Jr. earlier this week hinted at the possibility of two more reductions to the key rate at the last couple of meetings of the Monetary Board this year.

“The initial rate cut from the BSP and further cuts up to 2025 should result in lower mortgage rates and help resuscitate take up for residential units across the country,” said Joey Bondoc, senior research manager at Colliers Philippines.

Source: Inquirer and Business World

Construction projects down in July

Construction projects in the country registered declines both in terms of number and value in July from a year ago, according to the Philippine Statistics Authority.

Preliminary data released by the PSA showed that there were 14,343 construction projects from approved building permits in July this year, 2.4 percent lower than the 14,689 recorded in the same month last year.

The value of construction projects also dropped by 14 percent to P41.21 billion in July this year from the previous year’s P47.95 billion.

Residential projects accounted for 67.3 percent of the total construction projects in July.

There were 9,652 residential projects in July, down by 2.9 percent from 9,944 projects in the same month a year ago.

The value of residential projects in July dipped by 10.5 percent to P15.97 billion from P17.85 billion in the same month in 2023.

Meanwhile, the number of non-residential projects went up slightly to 2,907 in July from 2,903 in the same month last year.

The value of these projects dropped by 16.9 percent to P21.41 billion in July from P25.77 billion in the same month of 2023.

Permits for additions or any construction involving increases in the height or area of an existing building, also decreased by 7.6 percent to 500 in July from 541 in the same month of the previous year.

In terms of value, these projects rose by 21.6 percent to P438.30 million in July from P360.35 million in the same period a year ago.

Alterations and repairs of existing structures increased by 2.5 percent to 993 projects in July from 969 projects in the same month of 2023.

The value of alterations and repairs decreased by 18.4 percent to P3.07 billion in July from P3.76 billion in the same month last year.

Source: Philstar

Construction materials price growth slows in July

The retail price growth of construction materials in the National Capital Region (NCR) slowed down in July compared to last year's rate, according to the Philippine Statistics Authority (PSA).

In its latest report, the PSA said that the average growth of the construction materials retail price index (CMRPI) in the NCR slowed down to 1.1 percent last month from 1.5 percent in July 2023.

On a monthly basis, it moved up from February's 1.0-percent growth rate.

The PSA said that the primary contributor to the monthly uptrend of the CMRPI in the region was the higher annual increase in the heavily weighted tinsmithing materials index at 1.6 percent from 1.2 percent in the previous month.

In addition, two commodity groups registered annual increases in July as compared with the previous month.

Carpentry materials posted a 0.6-percent growth last month from the 0.2 percent in June and electrical materials at 1.6 percent from 1.4 percent in a month earlier.

Commodity groups that retained their previous month's annual rates include painting materials and related compounds, 1.4 percent; plumbing materials, 0.2 percent; miscellaneous construction materials, 2.1 percent; and masonry materials, 0.2 percent.

On the other hand, the year-on-year growth rate of the construction materials wholesale price index in the NCR inched up to 0.5 percent in July from 0.4 percent a month earlier.

However, this was slower from last year's annual rate registered at 5.7 percent.

During the month, increases in annual growth rates compared to June 2024 were posted in some commodities. Electrical works rose faster at 3.2 percent from 1.5 percent in the previous month.

Faster annual increases were also recorded in the indices of metal products at 1.1 percent from 0.9 percent and plumbing fixtures, and accessories/waterworks at 1.0 percent from 0.9 percent.

Slower annual increases, meanwhile, were observed in the indices of fuels and lubricants to 12.9 percent in July from 14.1 percent in the previous month; PVC pipes to 1.3 percent from 1.4 percent; and painting works to 1.3 percent from 1.7 percent.

Source: Manila Times