Weak demand amid pandemic pulls down home prices in Q3 — BSP

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Metro Manila (CNN Philippines, December 23) — Prices of residential properties contracted annually in the third quarter of 2020, the Bangko Sentral ng Piilipinas has reported.

Prices went down by 0.4 percent year-on-year, the latest Residential Real Estate Price Index (RREPI) revealed. The BSP noted this is the first time the index recorded a negative annual growth since it was first unveiled in the first quarter of 2016.

"The decline in the RREPI may be partly due to the weak consumer demand for houses and lots," said the central bank, adding it is consistent with the results of its recent consumer expectations survey. That survey showed participants' "low preference" for purchasing real estate property as the COVID-19 pandemic and the resulting economic instability continue to persist.

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Figures are worse in terms of quarterly growth, with the third-quarter index seeing a 14.1 percent slump compared to its level in the April to June quarter.

Real estate prices in the National Capital Region from July to September posted a 12.2 percent decline annually. The BSP said the drop in prices of condominium units and duplexes outdid the growth in those of single detached/attached houses and townhouses, effectively pulling rates in the capital region down.

Meanwhile, areas outside the region saw higher home prices, registering a 6.4 percent rise year-on-year. All types of housing units enjoyed higher costs during the period, except for duplexes.

However, in terms of housing unit type, the change in costs across the different kinds of residential properties was rather mixed. Prices of condominium units and duplexes dropped during the quarter compared to last year by 15 percent and 8.8 percent, respectively. Townhouses and single detached/attached houses, meanwhile registered price growths of 12 percent and 7.4 percent, respectively.

Consumers made less loans for real estate purchases during the period compared to last year by 43.3 percent. Against the previous quarter, however, this figure grew by 59.7 percent.

Of the residential real estate loans incurred in the third quarter, purchases of condominium units comprised the biggest chunk at 48.7 percent in the third quarter, followed by single detached or attached houses at 43 percent and townhouses at 7.9 percent.

Most of the loans granted in the NCR were for borrowers buying condominium units. Purchases of single detached/attached houses comprised most of the loans granted outside the region.

In terms of region, the capital region got 46.5 percent of the granted loans, followed by Calabarzon at 26.5 percent and Central Luzon at 7.7 percent. 5.1 percent of the loans were distributed in Western Visayas, 4.9 percent in Central Visayas, 2.8 percent in Davao, while Northern Mindanao got 2 percent.

All in all, they comprise 95.5 percent of the total housing loans granted by banks, the BSP added.