Demand for residential property may decline
Demand for residential property may drop due to rising interest rates and prices, according to a property services firm.
Citing data from the Bangko Sentral ng Pilipinas (BSP)’s Residential Real Estate Price Index (RREPI), Cushman and Wakefield Philippines said residential property prices are slowly rebounding, rising by 5.6 percent in the first quarter.
“Residential prices in Metro Manila, particularly for condominium properties, are slowly bouncing back amid the sustained reopening of the economy that allowed increased business activities in the capital region,” Cushman and Wakefield said.
“However, the BSP’s decision to raise the key policy interest rate to 3.25 percent and the higher level of overall prices could dent demand for residential real estate in the short to medium term,” it said.
The BSP reported that residential property prices in the National Capital Region (NCR) increased by 9.5 percent year-on-year, mainly driven by the increase in the prices of condominium units and townhouses, which more than offset the decrease in the prices of duplex housing units and single-detached/attached houses.
Similarly, property prices in areas outside the NCR rose by five percent year-on-year as all types of housing units registered an upturn, except for single-detached/attached houses, which posted a decline.
Apart from the residential market, the property services firm said recent upward adjustments in the benchmark interest rates may also affect the level and accessibility for both retail and corporate bank financing.
In an earlier report last month, Cushman and Wakefield said the country’s residential segment is experiencing a steady recovery as market activities scale back to normalcy.
“While the momentum of the segment’s growth in Metro Manila can be largely associated with the return-to-office scenario, particularly by the IT-BPM industry, which is heavily concentrated in the CBDs, integrated communities with residential components will continue to spur in the provincial areas, particularly in Central Luzon where there are major infrastructure developments,” it said.
Santos Knight Frank (SKF) chairman and chief executive officer Rick Santos said that the higher interest rates in the country are expected to affect home mortgages.
“Interest rates impact on home mortgages will also be seen. We’re seeing mortgage rates going up,” Santos said.