APPROVED building permits declined 10.8% in December, a turnaround from the 1% growth posted a year earlier, the Philippine Statistics Authority (PSA) reported.

The PSA, citing preliminary data, said building projects covered by the permits numbered 10,809 in December, down from 12,116 a year earlier.

The November growth rate had been 9.3%.

Building projects in December covered a floor area of 2.63 million square meters, down 20.7% from a year earlier.

During the period, construction projects represented by the permits were valued at P32.94 billion, down 11% from a year earlier.

“GlobalSource Partners Country Analyst and former Bangko Sentral Deputy Governor Diwa C. Guinigundo said a housing glut may help explain the building slowdown.

The Bangko Sentral ng Pilipinas (BSP) Residential Real Estate Price Index (RREPI) declined 2.3% during the three months to September period, a reversal from the 2.7% growth a quarter earlier.

This marked the first decline for the RREPI since the 9.4% contraction in the second quarter of 2021.

“There is a possible glut in the market especially in the high end of the retail residential sector,” Mr. Guinigundo said via Viber.

He also added that high lending rates may be a factor behind the weak building activity.

Oikonomia Advisory and Research, Inc. economist Reinielle Matt M. Erece said weakness in building activity could indicate that project proponents are pausing until interest rate cuts materialize in 2025.

“It is in their best interest to time their capital raising and expenditures correctly to take advantage of relatively lower borrowing costs,” he said via e-mail.

Since August, the BSP cut interest rates by 25 basis points at each of its three subsequent meetings.

Permits for residential projects, which accounted for 62.2% of the total, fell 15.7% to 6,728.

These projects were valued at P13.62 billion, compared to P14.86 billion a year earlier.

Single homes accounted for 91.2% of the residential category with approved permits contracting 7.9% to 6,138.

Applications for apartment buildings declined 57.8% to 494 while applications for duplex or quadruplex homes fell 32.1% to 89.

Nonresidential projects were steady year on year at 2,589 permits, accounting for 24% of the total.

Nonresidential permits were valued at P16.26 billion, down 9.7% from a year earlier. This accounted for 24% of the total.

Commercial construction applications accounted for 67.3% of nonresidential projects, up 0.4% to 2,165.

Institutional permits rose 1.8% to 461 while industrial permits fell 7.1% to 222. Alteration and repair permits amounted to 837, down 7.9% year on year and were valued at P1.79 billion.

Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) had the most approved building projects, accounting for 22.6% of the total, with 2,441 construction projects, followed by the Central Visayas (1,239 permits) and Central Luzon (1,143 permits).

The PSA said construction statistics are compiled from the copies of original application forms of approved building permits as well as from demolition and fencing permits collected monthly by the agency’s field personnel from the offices of local building officials nationwide. — Kenneth H. Hernandez