IMF shares expertise in real estate assessment

MANILA, Philippines — The International Monetary Fund (IMF) is helping the Bangko Sentral ng Pilipinas (BSP) improve the indicators in assessing the real estate and credit market conditions in the country.

The multilateral lender has conducted a technical assistance maission last year to assist the BSP with its property price statistics via an updated Residential Real Estate Price Index (RREPI) and the new Commercial Property Price Index (CPPI).

Monetary authorities use the RREPI and the CPPI as an input into the design of macroprudential policies, including those policies that aim to reduce systemic risks arising from excessive financial procyclicality, such as asset bubbles.

According to the IMF, the BSP has decided to delay the launch of the updated RREPI and the new CPPI to evaluate a new methodology to ensure it adheres to international compilation standards and best practices.

Under its detailed technical assessment and recommendations, the IMF said there is a need to increase the capacity of the team with the methods through a training course or planning further technical assistance in the second quarter and the transfer of the processing and aggregation of data to a statistical software by the fourth quarter.

In 2024, the IMF said the BSP should use the Inter-Agency Working Group on Property Price Statistics (IAWGPPS) to develop goals, build relationships and negotiate data access, as well as initiate a pilot project to test if it is possible to link the Land Registration Authority (LRA) data with data provided by a single local government unit (LGU).

“To negotiate access to new data sources, the BSP plans to convene an IAWGPPS consisting of members from the BSP, the Philippine Statistics Authority, the LRA, and other government agencies,” the IMF said.

The mission analyzed available administrative data sources and recommended some initial steps to assess their suitability for use in the production of the RREPI and CPPI.

“This work will take some time to progress and will involve a significant investment in terms of resources,” it said.

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.

Latest data showed property prices in the Philippines further picked up in the third quarter of last year amid the resumption of on-site work and face-to-face classes with the  lifting of strict COVID-19 quarantine and lockdown protocols.

The latest Residential Real Estate Price Index (RREPI) of the Bangko Sentral ng Pilipinas (BSP) showed an increase of 6.5 percent to 148.6 in the third quarter of 2022 from 139.5 in the same quarter in 2021.

The index has been rising steadily from 139.8 in the first quarter to 142.1 in the second, and 148.6 in the third quarter as the economy further reopened after the resumption of strict lockdown in January amid the rise in COVID-19 infections due to the highly contagious Omicron variant.