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Q4 home price hike biggest in three quarters

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SMDC
Monetary authorities have sought to allay nagging fears of a real property bubble, noting that the overall increase in prices has so far been fueled by actual demand for units.

HOUSE PRICES rose faster in 2017’s last three months from a year ago, marking the biggest increase in three quarters as duplex and condominium prices surged by double-digit pace, according to data the Bangko Sentral ng Pilipinas (BSP) released on Wednesday.

Prices rose by 5.7% year-on-year from October to December, clocking the fastest pace since a 6.5% climb in 2017’s first quarter, according to the latest BSP residential real estate price index (RREPI). The 2017 fourth-quarter pace compares to the preceding three months’ 1.8% and the year-ago 3.3% rise.

On average, housing prices rose by 3.6% for the entire 2017, roughly flat from 2016.

The RREPI measures the average change in home prices across building types and locations based on data from housing loans granted by universal, commercial, and thrift banks, helping the central bank monitor the real estate market and watch out for potential bubbles. The BSP has been monitoring the sector’s data since the fourth quarter of 2015.

By structure, duplex prices rose by 17.3% from a year ago, followed by condominiums’ 14.2%, townhouses’ 8.1% and single-detached or attached houses’ 0.3% drop.

For full-year 2017, however, duplex prices still dropped 2.7% overall, while condominium units led increases at 6.5%, followed by townhouses’ 4.7% and single-detached/attached houses’ 1.8%.

Costs to acquire homes shot up faster in Metro Manila than in the provinces in 2017’s final three months. Prices in the capital rose by 8.8%, while those outside the region went up by three percent, according to central bank data.

In Metro Manila, the prices of duplex units surged 138.1% year-on-year, while those of condominiums climbed 15.2%. At the same time, prices of single-detached/attached houses dropped 9.9%, while those of townhouses fell by 8.6%.

Full-year 2017 saw Metro Manila house prices climb 4.8% year-on-year, fueled by a 26.8% increase of duplex prices, as well as condominiums’ six-percent, single-detached/attached houses’ 1.5% and townhouses one-percent increments.

In the provinces, townhouses led prices increases with a 20.1% hike, followed by condominium units’ 8.4%, single-detached/attached houses’ 0.8% and duplexes’ 0.3%.

Overall house prices in the provinces grew 2.7% last year as condominium prices grew 10.5% and those of townhouses and of single-detached/attached houses rose 6.1% and two percent, respectively. These increases, however, were partly offset by a 5.9% drop in the prices of duplexes.

Roughly 80% of home loans granted by banks financed the purchase of new units, the BSP said, with more than half used to acquire condominium units.

Over a third of loans were used to buy single detached units, while townhouses accounted for 7.3%.

More than half of the loans were secured in Metro Manila, followed by the Cavite-Laguna-Batangas-Rizal-Quezon or Calabarzon region (23.6%), Central Luzon (6.4%), Central Visayas (4.7%) and Western Visayas (4.7%).

Central bank officials have noted sustained strong demand for commercial and living space in the Philippines, showing that price increases are driven by actual demand and allaying fears of a bubble.

A bubble forms as a perceived rising demand for houses drives developers to build more units, and is said to “burst” as consumption stagnates and causes an abrupt drop in prices that could jolt exposed banks.

The BSP limits a bank’s real estate exposure to 20% of its total loan portfolio.

Philippine banks handed out P1.801 trillion in real estate loans last year, with home loans accounting for a third at P608.142 billion, according to latest available BSP data. — Melissa Luz T. Lopez