Property prices slow in Q4

MANILA, Philippines — The growth in property prices has been sustained for 10 straight quarters, albeit at a slower pace in the fourth quarter last year, according to the Bangko Sentral ng Pilipinas (BSP).

The central bank’s Residential Real Estate Price Index (RREPI) booked a 6.5- percent increase to 161.7 in the fourth quarter from 151.9 in the same quarter in 2022.

The latest growth rate was slower than the 12.9 percent expansion recorded in the third quarter of 2023.

On a quarterly basis, the index contracted by 3.6 percent in the fourth quarter from the RREPI of 167.7 in the third quarter. This was a turnaround from the 3.4 percent growth seen a quarter ago.

The RREPI, launched in the first quarter of 2016, is used as an indicator for assessing the real estate and credit market conditions in the country.

“Higher borrowing costs showed their impact on the sector and on capital formation as a whole,” ING Bank senior economist Nicholas Mapa said.

“Although the fourth quarter generally sees a pullback on a quarter-on-quarter basis, the dip was more pronounced, likely due to the elevated interest rate environment,” Mapa added.

The BSP has raised interest rates by 450 basis points between May 2022 and October 2023, bringing the target reverse repurchase rate to a near 17-year high of 6.50 percent from an all-time low of two percent.

“With rates staying high at 6.50 percent, we can continue to see the sector report moderate growth as higher rates cap the sector,” Mapa said.

According to the BSP, the increase in the nationwide RREPI in the second quarter was mainly driven by the rise in the prices of single-detached houses, townhouses and condominium units. This was offset by lower prices of duplex housing units.

The index showed the prices of single-detached units rose annually by 9.5 percent to 138.2; followed by townhouses, up by 4.9 percent to 203.4 and condominium units, up by 4.1 percent to 207.4.

The prices of duplex units fell by 33.5 percent to an index of 152.3 in the fourth quarter.

According to the BSP, the year-on-year pickup in housing prices nationwide to the 4.3 percent rise in residential property prices in the National Capital Region (NCR) to 183 in the fourth quarter from 175.5 a year ago.

Likewise, the residential real estate prices in areas outside the NCR grew by 7.8 percent to 154 from 142.9.

Meanwhile, the number of real estate loans granted for all types of new housing units in the country climbed by 30.5 percent year on year. This was fueled by the 38.5 percent growth in residential real estate loans in NCR and the 26.6 percent expansion in areas outside NCR.

The average appraised value of new housing units in the country stood at P89,042 per square meter in the fourth quarter. The average appraised value per sqm was higher in the NCR at P134,178 than both the national and AONCR average at P65,186.