FILE / STOCK
The issuance of building permits fell by 7.5 percent in August from the past year, largely due to high interest rates as well as costly overhead and construction materials, the Philippine Statistics Authority (PSA) reported.
Based on preliminary data from the PSA, building permits fell to 13,436 in August, equivalent to 3.23 million square meters (sqm) in floor area valued at P43.05 billion.
The combined floor area of approved building projects went up by 1 .9 percent, reversing the last year’s 4.5-percent contraction.
READ: Building permit approvals decline in June
On the other hand, total value of permitted projects rose by 1.1 percent, slower than the 3.2-percent growth last year.
Rizal Commercial Banking Corp. chief economist Michael Ricafort attributed the decline in building permits to relatively higher interest rates, more expensive labor and other input costs that had curbed the volume of submitted applications.
“Higher local interest rates since 2022 [were] meant to slow down demand for loans including for construction or real estate, in an effort to bring down inflation back to the [2-4 percent] central target,” Ricafort told Inquirer.
He noted that the ban on Philippine offshore gaming operators (Pogos) and the rise in digital commerce have led to more vacancies, which in turn have reduced the number of building permits issued.
Residential building permits dropped by 9.6 percent to 8,694 from last year’s 9,621. These projects were valued at P17.66 billion with a floor area of 1.46 million sqm.
Meanwhile, nonresidential building construction permits, which accounted for more than two fifths of the total value during the month, amounted to P18.31 billion. This, however, declined by 13 percent from P21.06 billion seen last year.
The average cost of construction in August was estimated at P9,840.20 per sqm, about 15.9 percent cheaper compared with P11,700.77 per sq.m last year.
Residential buildings were the most expensive to construct, recording an average cost of P12,079.06 per sqm. Nonresidential building cost was estimated at P10,551.32.16 per sqm.
The Calabarzon region – composed of the provinces of Cavite, Laguna, Batangas, Rizal and Quezon – accounted for 25.1 percent of all approved building permits in August with 3,370, followed by Central Visayas with 12.7 percent (1,700) and Central Luzon with 10.5 percent (1,411).
Ricafort added that anticipated rate cuts from the US Fed and local authorities until next year could stimulate a rebound in construction and real estate activities. INQ