The government will have to shoulder on its own the shelter needs of the poorest 30 percent of Filipinos nationwide, as all of them cannot afford socialized housing, while private developers are shying away from these projects for being “unprofitable”.
This is based on the report “Better, Greener, Smarter Cities in an Inclusive Philippines” presented by Vice President Maria Leonor G. Robredo, the concurrent chairman of the Housing and Urban Development Coordinating Council (HUDCC), at the UN Habitat III in Quito, Ecuador.
The poorest-30 percent, also known as the Bottom 30, are composed of families earning an average of P146,984 to P231,134 a year, based on the 2012 Family Income and Expenditure Survey (FIES).
The HUDCC report stated that socialized housing in the Philippines, which includes building a house and buying land, costs a maximum of P450,000.
“Analysis shows that this package appears to be generally affordable at the 30th percentile, or by about 70 percent of the urban households living in Metro Manila, but not by the bottom 30 percent, or those living in regions outside the NCR [National Capital Region],” the report stated.
The socialized-housing cost appears too high a price for the income of Filipinos in the Bottom 30, since more often than not, their expenses are higher or just slightly lower than their incomes.
Data showed that on average, the Bottom 30 families spend a minimum of P156,081 to a maximum of P219,078 a year on various food and nonfood commodities.
In terms of spending, the majority, or 62.3 percent, of their expenses are made on food and only 20.6 percent are spent on housing and utilities, such as water, electricity, gas and other fuels.
“Private developers, for their part, have tried to provide housing but unable, so far, to deliver, at the price and scale needed, since many of them consider housing for the urban poor to be unprofitable. The majority of them also perceive they will be unable to build and sell house-and-lot packages for P450,000 [$9,575],” the report stated.
The cost of buying a house is also inaccessible for unemployed and underemployed individuals, as well as informal settlers in many urban areas nationwide.
Given this, the report stated that the government needs to create more innovative financing options for the poor, particularly urban informal settlers.
One of these approaches can include housing microfinance and microenterprise finance. This can be a sustainable source of unleveraged finance for informal settlers.
“A capable and committed financial institution that caters to the development and end-user financing for informal settlers through a variety of appropriate and innovative lending instruments will be essential to scaling-up the appropriate interventions,” the HUDCC said.
Currently, socialized housing finance is available only to legally organized informal-settler families (ISFs) through the Social Housing Financing Corp. (SHFC). The SHFC is a government agency organized to undertake financing initiatives in social housing for the urban poor.
It provides financing through the Community Mortgage Program. Since 2001, more than 230,300 families have gained access to secure tenure through the program. Between 2001 and 2015, the Philippine government provided relocation and shelter security to a total of 550,560 families—spending between P203,000 to P310,000 per family.