By Melissa Luz T. Lopez,

Senior Reporter

HOUSING PRICES in the Philippines remain volatile, a senior central bank official said, although latest signals allay fears of an asset bubble after property costs actually slipped during the second quarter.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo said the real estate sector is far from seeing a credit crunch, with the central bank having observed that prices dropped from a year earlier.

Housing prices dropped by 4.6% between April-June, according to the results of the BSP’s residential real estate price index (RREPI) released over the weekend. This marks the first time in two years that property costs declined, and compares to a 1.2% increase recorded between January-March and the 11.6% surge in prices posted during the same year-earlier period.

RREPI measures the average change in housing costs across building types and locations, which allows the central bank to monitor overall real estate and market conditions.

“House prices could really be very volatile as seen in the last few quarters run of RREPI. Property bubbles shall have been formed if property prices have gone up multiple times as in Singapore and Hong Kong lately until they started implementing various forms of macroprudential measures,” Mr. Guinigundo said in a text message, as he noted that current signals do not point to an unsustainable price trend.

An asset bubble forms due to perceived rising demand for housing units, driving developers to build more, and is said to “burst” as demand stagnates, which will lead to an abrupt drop in property prices that could potentially jolt the banking system.

“Property prices are considered serious if their escalation is one, generalized across different property groups and two, a singular uptrend. These two quick metrics do not emit warning signals. But having clarified these issues, close monitoring is always being done by the BSP,” the central bank official added.

It was cheaper to buy homes in the provinces during the three months to June as prices posted an 8.2% decline from a year earlier. Meanwhile, those who acquired houses within Metro Manila paid for the properties at rates which are 2.5% higher from the prior year.

Single-detached home prices dropped 9.9% nationwide, and are the dwellings of choice for Filipinos living in the provinces.

Condominiums, which are the preferred property among those in Metro Manila, saw prices rise by 5.1%.

Philippine banks handed out P1.644 trillion in property loans as of end-June, according to BSP data. Of the amount, roughly a third at P561.311 billion were extended for home acquisitions, 16.6% higher than the P481.315 billion in approved housing loans in June 2016.

In September, the central bank announced tighter reporting requirements, telling banks to submit more detailed data on property loans and project finance. Fitch Ratings said the new rules would give the regulator a more comprehensive view of the property sector in order to quell potential bubbles.









