MANILA, Philippines – The number of approved construction permits posted their steepest decline in eight months in January, as tight financial conditions and higher prices of building materials hurt demand for new properties.
Preliminary data from the Philippine Statistics Authority (PSA) showed there were 12,526 building permits approved by local governments in the first month of 2025.
That was 14.6 percent lower compared to the 14,665 permits approved a year ago. Figures showed the January reading was the deepest slump in new construction activity since the 15.4-percent contraction recorded in May 2024.
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In terms of space, the new projects had a combined floor area of 3.72 million square meters (sq m), 29.5 percent bigger compared with a year ago.
Meanwhile, the total value of new buildings in January amounted to P48.58 million, higher by 26.1 percent amid rising prices of construction materials.
Rischelle Alysha Legaspi, an economist at Oikonomia Advisory and Research Inc., said demand for new properties might have been hit by higher prices of construction materials and more expensive borrowing costs.
“The decline can be attributed to rising costs. Both residential buildings and commercial buildings experienced a decline in project quantity. Despite this, the construction value increased,” Legaspi said.
“The slowdown in economic growth and unadjusted interest rate could have decreased the demand for investing in new and high-valued property,” she continued, adding that the construction slump was also “a reflection of financing capabilities of firms and households.”
Easing inflation, rate cuts
Dissecting the PSA’s report, the number of permits granted for new residential projects had declined by 14.1 percent to 7,671.
These housing projects had occupied 1.45 million sq m in total space and were cumulatively worth P20.94 million, costlier by 28 percent compared with a year ago.
Meanwhile, approved building permits for commercial projects had contracted by 4.3 percent to 3,138 in January. These constructions took up 2.22 million sq m of floor area and were valued at P24.16 million, 40.4 percent more expensive year-on-year.
Moving forward, Oikonomia’s Legaspi said easing inflation and anticipated interest rate cuts could improve local demand for new buildings.
“However, geopolitical uncertainty could contribute to higher inflation, should there be supply shocks on imported construction materials. Higher costs would decrease consumer demand for property investments,” she added.
