House price growth slows in the first quarter

Home prices rose at a slower pace nationally Ffirst quarter, the Bangko Sentral ng Pilipinas (BSP) said.

Central bank data showed the Residential Real Estate Price Index (RREPI) rose 6.1% year-on-year in the January-March period, but slowed from the 6.5% growth in the previous quarter and the growth of 10.2% a year ago.

This was also the weakest national house price growth since the 2.6% recorded in the second quarter of 2022.

On a quarterly basis, home prices rose 1.1%, a reversal from the 3.6% decline in the fourth quarter.

The RREPI tracks the average price changes of homes over TuesdayFdifferent housing types and locations. This gives the central bank insight into the real estate market, which is regulated due to its exposure to banks.

Joey Roi H. Bondoc, associate director for research at Colliers International Philippines, attributed the slowing price growth to weak demand for residential projects.

“We see FLatin price growth, mainly due to tepid demand in the housing market. In Metro Manila, only 3,000 units were sold in the pre-sale sector, down 52% year-on-year. We also see this in terms of launches, which were down 59% year over year,” he said in an email.

Data from the BSP showed that apartment prices increased by 10.2% year-on-year. This was faster than 4.1% a quarter earlier and 1.2% in the same period a year ago.

Duplex home prices rose 36.2% in the US Fin the first three months, a turnaround from the 33.5% contraction a quarter ago and faster than the 22.1% growth a year earlier.

Townhouse prices rose 5.6%, faster than 4.9% in the fourth quarter and 1.8% in the same period in 2023.

Meanwhile, prices of single or semi-detached homes rose by 5.1%. This was much slower than 9.5% in the previous quarter and 17% a year ago.

Mr. Bondoc noted that horizontal projects remain attractive, especially among overseas Filipino workers (OFWs), but demand has yet to return to pre-pandemic levels.

House prices in the National Capital Region (NCR) rose 2.8% in the month Ffirst quarter, slower than 4.3% a quarter ago and 7.3% a year earlier.

“Year-on-year, home prices in the NCR rose by 2.8% in the Ffirst quarter of 2024, as the growth in prices of townhouses and condominium units exceeded the decline in prices of single-family homes,” the BSP said.

On the other hand, house prices in areas outside NCR (AONCR) rose by 7.4%, down from 7.8% in the fourth quarter and 11.4% a year earlier.

“We expect demand growth to come from areas outside NCR, including Central Luzon, Calabarzon, Western Visayas, Central Visayas and the Davao region, especially for house-and-lot and lot-only developments,” said Mr. Bondoc .

Meanwhile, home and real estate loans granted for all types of new homes rose by 8.9% Ffirst quarter, much slower than the 30.5% growth in the fourth quarter and 16% a year ago.

Broken down, home loans in NCR and AONCR rose by 3.2% and 11.4% respectively.

The majority of loans were used to purchase single-family homes (43%), condominium units (34.7%), and townhomes (22%).

In the FIn the first quarter, the average assessed value of new homes in the Philippines was P82,260 per square meter (sqm).

The average appraised value in NCR was P132,743 per m², while the average appraised value in AONCR was P61,163 per m².

“Going forward, we expect developers will be more cautious in launching presale condominiums in Metro Manila, given the remaining life of inventory (RIL), or the time it takes for the market to absorb presales and be ready for occupancy ( RFO) units, is still around three years,” Mr Bondoc said.

He also noted the impact of higher interest and mortgage rates.

“While horizontal (house-and-lot and lot-only) projects are among their preferred properties, still high mortgage rates are forcing OFW buyers to wait and see,” Mr Bondoc said.

Last week, the Monetary Board kept its benchmark interest rate unchanged for the sixth time in a row at 6.5%, the highest level in more than seventeen years.

“If there is no rate cut for the rest of the year, we could still see tepid demand in the housing sector. Given all this, we do not see a substantial spike in demand and prices for the remainder of 2024,” he added.

BSP Governor Eli M. Remolona Jr. has said it is still on track to cut rates as early as August, possibly by 25 basis points (bps).

The central bank could cut rates again by 25 basis points in the fourth quarter, he added. — Luisa Maria Jacinta C. Jocson