The prospects for recovery for the NCR residential and condominium market are very high as a result of the back-to-work office arrangement of most companies and the sustained recovery in overseas Filipino workers’ remittances (File Photo).
The pandemic’s impact on the country’s residential market can be used to assess its resiliency, using the Bangko Sentral ng Pilipinas’ Residential Real Estate Price Index as primary data.
Strong residential market
From Q3 2016 to Q3 2019, nationwide residential prices grew by an average of 5.8 percent, supported by double-digit growths in duplex (16.4 percent), condominium (13.8 percent) and townhouse (11.6 percent) prices. Single-detached housing prices barely moved. During the pandemic, as of Q3 2020, prices went down by a mere 0.4 percent, suggesting a strong residential market. This was sustained by price increases in townhouse (12 percent) and single-detached houses (7.3 percent), although decreases were noted in condominium (-15 percent) and duplex (-8.8 percent) prices.
The increase in prices for the single-detached and townhouses can be attributed to health and affordability reasons. Those with sufficient money preferred single-detached homes for health reasons while those with less money opted for the price range between a condominium and a duplex, but still with the goal of having a sufficient space for the family’s work-from-home, on-line school, and other activities.
Price movements
The same price movements can be observed in the National Capital Region (NCR), albeit in much higher percentages.
The NCR residential price index was growing at 11 percent annually from Q3 2016 to Q3 2019, supported by price increases in duplex (31 percent), condominium (15 percent) and townhouses (3.5 percent). Single-detached home prices in the NCR also barely moved.
However, during the pandemic, NCR residential prices went down by 12.2 percent. The severe lockdowns in NCR resulted in a standstill in the real estate industry which affected home prices.
For this period condominium and duplex prices decreased by 18 percent and 12 percent, respectively. However, increases in the single-detached home (23.3 percent) and townhomes (11 percent) prices were noted, mirroring the national residential price behavior.
As of Q3 2022, prices have recovered. The NCR overall housing price index (versus Q3 2019) has grown by 15 percent, led by single-detached homes (32.5 percent), followed by townhomes (29.5 percent) and condominium (15 percent).
Important observations
The BSP’s housing price index can give the residential real estate stakeholders at least three very important observations when pandemic-induced economic slowdown happens.
First, the residential market is very resilient as shown by the quick recovery in terms of price indices. Second, housing demand shifts to what is needed (as in the case of the single-detached homes) and what is affordable (townhouses). Lastly, despite the current oversupply of condominium units in NCR, prices have still gone up, implying the existence of demand and confidence in the market.
Focusing on NCR condominium prices, Lobien Realty Group (LRG) figures show that, compared to 2021, 2022 condominium prices increased by 5 percent, underscoring the start of a gradual recovery in this segment.
Caloocan and Las Piñas led the price increases at 19 percent and 17 percent, respectively, followed by Parañaque (8 percent), Pasig (5 percent) and Manila (4 percent). However, the increased supply in Bay Area and Alabang may have negatively affected condominium prices in these districts, which showed a decrease of 7 percent in both areas.
Despite the current high interest rates, the prospects for recovery for the NCR residential and condominium market are very high as a result of the back-to-work office arrangement of most companies, the sustained recovery in overseas Filipino workers’ remittances and Philippine employment rate, and the competitive pricing schemes for ready-for-occupancy (RFO) units by many developers to push out supply.
The author is the chief executive officer of Lobien Realty Group Inc., a full-service real estate consultancy and property investments strategy firm