Residential real-estate prices continued to increase in the first quarter of 2018, albeit at a slower pace compared to the rate of expansion recorded a year ago, according to data from the Bangko Sentral ng Pilipinas (BSP).
The BSP recently reported updates on the quarterly release of the residential real-estate price index (RREPI)—a Central Bank initiative officially launched in 2016.
The Central Bank’s first-quarter report showed that residential real estate prices grew by 2.1 percent in the January-to-March period, slower than the 6.5-percent hike recorded a year ago. The index rose to 116.3, from the previous quarter’s 113.9.
The RREPI measures the average changes in prices of different types of housing units over a period of time, where the growth rate of the index measures house inflation.
The construction of the RREPI is based on the banks’ approved housing loan applications.
Earlier this year, some international analysts flagged local banks’ exposure to real estate as “one of the pockets of risks” to be monitored in the banking sector.
Moody’s Investor Service said while banks’ asset quality generally improved in recent assessment, they are still exposed to potential risks, particularly in the real-estate sector.
In January BMI Research—a Fitch Group subsidiary—also said downside risks to the banking sector still loom in the horizon, as seen in their “heavy lending” to the real-estate sector.
The growth in the country’s RREPI was driven by the increase in the average residential prices in both the National Capital Region (NCR) and areas outside the National Capital Region (AONCR).
Average residential property prices grew faster in NCR at 2.7 percent, while those in AONCR grew 0.9 percent.
According to the BSP, in the NCR the higher growth in prices of condominium units, townhouses, and duplexes offset the decline in prices of single
detached houses.
The faster increase in prices of townhouses and duplexes in AONCR outweighed the decline in the prices of single detached houses and condominium units.
In terms of types of housing units across the country, duplex units posted the fastest growth in prices—registering a 44.2-percent hike for the quarter, accelerating from the previous year’s 20.5-percent contraction.
This was followed by the prices of townhouses, which expanded by 2 percent, and by 2 percent for condomium units.
Bucking the trend is the average price of single detached/attached houses, which contracted by 0.6 percent during the quarter.
In terms of the profile of real-estate loans during the quarter, about 73.5 percent of all residential property loans were for the purchase of new housing units.
Data from the BSP showed that, by type of housing unit, 48.9 percent of residential property loans were for the acquisition of condominium units, followed by single detached units to account for 43.2 percent and townhouses at 7.6 percent.
By area, condominium units were the most common house purchases in the NCR, while single detached houses were prevalent in AONCR.