New guarantee ceilings for low, medium cost housing approved

CEBU, Philippines — The Philippine government has approved new guarantee ceilings for low-medium-cost housing packages in response to requests from the Subdivision and Housing Developers Association (SHDA).

The National Economic and Development Authority (NEDA) and the Department of Human Settlements and Urban Development (DHSUD) have formalized the adjustment through the Joint Memorandum Circular No. 2024-001.

This move addresses the need to align housing costs with current economic conditions.

SHDA has been actively sending their position to the proper agencies for a review of the ceiling. In their latest request to NEDA on July 22, 2024, for approval from the Philippine Guarantee Corporation (PHILGUARANTEE), NEDA Undersecretary for Policy and Planning, Dr. Rosemarie G. Edillon, in a letter addressed to SHDA through its chairman, Ar. Leonardo Dayao Jr., and President Atty. Joy Manaog.

“The adjustment was deemed timely and necessary as it accounts for the country's prevailing economic conditions,” said Dayao.

The recommendation, based on NEDA's price inflation analysis, led to the establishment of new guarantee ceilings, setting them at P4.9 million for low-cost housing and PHP 6.6 million for medium-cost housing.

“This adjustment is a significant step towards making housing more accessible to Filipino families," added Dayao, acknowledging NEDA and DHSUD serious stance in heeding the housing sector’s plea.

Likewise, Manaog emphasized the critical role of the adjustment to the growth of the sector saying “the revised ceilings will help bridge the gap between rising development costs and the affordability of homes for many Filipinos. This is a positive development for both developers and prospective homeowners."

The Joint Memorandum Circular No. 2024-001 specifies the following adjustments: Low-Cost Housing ceiling adjusted to P4.9 million, and Medium-Cost Housing ceiling adjusted to P6.6 million. Rising material costs, labor expenses, and overall inflation trends were key factors considered in these adjustments.

NEDA's economic analysis highlighted that these new ceilings would provide a more realistic framework for housing developers and make it easier for potential homeowners to purchase properties within their budget.

Pursuant to their mandate to jointly determine price ceilings for socialized, low-cost, medium-cost, and open housing every two years, the DHSUD and NEDA have set the ceilings as follows: Level 1-A (Socialized) - P300,000 and below; Level 1-B - Above P300,000 to P500,000; Level 2 - Above P500,000 to P1.25 million; Level 3 - Above P1.25 million to P3.0 million; Medium Cost - Above P3.0 million to P4.0 million; and Open Market - Above P4.0 million. Since its revision in 2007, the price ceilings for socialized and economic housing have been revised several times through various resolutions due to the steadily increasing costs of raw land, development, construction materials, and labor. The most recent revisions before this adjustment were the May 11, 2022, “DHSUD-NEDA Joint Determination for Economic Price Ceiling,” setting the economic guarantee ceiling to PHP 2.5 million, and Joint Memorandum Circular No. 03, Series of 2023 “Adjusting the Price Ceiling for Socialized Subdivision and Condominium Projects” from P580,000 to P850,000.

In November 2023, based on the current Consumer Price Index (CPI), Residential Real Estate Price Index (REPI) of the Bangko Sentral ng Pilipinas, and the minimum wage as parameters for the adjustments, PHILGUARANTEE re-submitted an adjusted proposal of P4.99 million and P6.65 million for low-cost and medium-cost housing, respectively.

The new guarantee ceilings are expected to benefit many prospective homeowners, making it easier for them to achieve their dream of owning a home in these challenging economic times.