Home prices extend rally in Q4 2021 on easing virus curbs

MANILA, Philippines — Home prices in the Philippines sustained their growth in the final three months of 2021, thanks to further easing of pandemic restrictions.

Data released by the Bangko Sentral ng Pilipinas on Friday revealed Residential Real Estate Price Index (RREPI), a measure of the average change in the prices of various types of housing units, rose 4.9% year-on-year in the fourth quarter of last year.

The BSP said the latest reading is consistent with the results of the consumer expectations survey showing a higher percentage of Filipinos preferring to buy real estate property during that period. Quarter-on-quarter, the RREPI grew 1.1%.

Introduced in the first quarter of 2016, the RREPI is based on banks’ data on actual mortgage loans granted to acquire new housing units only.

Despite the growth in prices, BSP data showed bank loans taken out to buy new houses contracted by 11.5% year-on-year in the fourth quarter despite record-low interest rates. It nevertheless expanded 2% quarter-on-quarter.

Broken down, prices of shelter in Metro Manila grew 5.0% year-on-year in the fourth quarter, slower compared to 11.4% increase in the preceding quarter. The growth last quarter was driven mainly by the rise in the prices of condominium units and townhouses, which more than offset the decline in the prices of duplex housing units and single-detached/attached houses.

Quarter-on-quarter, home prices in the capital region sagged 1.2%.

For Nicholas Antonio Mapa, senior economist of ING Bank in Manila, concerns surrounding a real estate bubble should be set aside, for now.

"The modest pickup in real estate prices suggest that outsized concerns about a real estate bubble can be allayed for now. The gains in prices reflect the general improvement in economic conditions enjoyed in the same quarter," he said in a Viber message.

Elsewhere, home prices in areas outside Metro Manila climbed 5.1% on-year in the fourth quarter.

“The rise in real estate prices was driven mostly by the improvement in prices outside NCR, reflecting the impact of the pandemic on consumer trends, here and abroad," Mapa said.

"With Filipinos now wary of the prospect of living under lockdowns, a preference for residential units outside the city has surfaced as residents seek more green and space," he added.