Residential property sales in Metro Manila down 38% in Q2

Property developers put up more residential units for sale in the second quarter of the year but sold fewer units compared to a year ago, according to property consulting firm Colliers International.

In the second quarter, property developers launched 54 percent more residential units compared to a year ago, bringing year-on-year expansion in six-month residential inventory to 13 percent, Colliers Philippines director for research and advisory services Julius Guevara said in a briefing on Tuesday.

But Guevara noted that take-up of units offered under the pre-selling activities of property developers had been slowing down. In the second quarter, residential units take-up in the metropolis fell by 38 percent year-on-year. For the first semester, the decline was 23 percent.

High-rise property developers typically sell residential units five to seven years ahead of completion.

Overall, Colliers said the residential market improved in the second quarter as reflected by an increase in confidence among developers compared to previous quarters when some of them held back on new launches.

Guevara also noted that the government through the Housing and Land Use Regulatory Board (HLURB) had also issued more licenses to sell during the second quarter, reversing the downward trend in the first quarter. In sum, there was a 2 percent year-on-year increase in the HLURB issuance of licenses to sell in the first quarter, whereas this level had fallen by about 50 percent in the first quarter. For the six-month period, HLURB-issued licenses to sell were still down by 11.7 percent.

Colliers noted, however, the improvement in the residential condominium applications. While new licenses for mid- and high-end condominiums were still lower than last year, the rate of decline has narrowed to 2 percent compared to 45 percent in the previous quarter. The low-cost condominium segment is seen as a small but growing housing format, with applications doubling year-on-year.

“The increased number of licenses may indicate that developers are now becoming more confident following a decrease in the previous periods,” the Colliers report said.

Licenses for “economic” housing rose by 8 percent year-on-year in the first semester but Colliers anticipates an increase in the quarters ahead due to a change in the price ceiling for this segment. The Housing and Urban Development Coordinating Council (HUDCC) raised the price ceiling to P1.7 million from P1.25 million for “economic” housing.

“Since buyers of this housing segment can avail themselves of lower interest rates through government housing agencies, this change allows more people to afford better housing,” the report said.

On the secondary market, Colliers also noted a decline in vacancy rates in the metropolis, consequently allowing rental rates to firm up. Vacancy rate in Makati, for instance, has fallen to 7.6 percent from 7.96 percent in the first quarter.

Average monthly rental rate in Makati central business district (CBD) amounted to P848 per square meter at end-June, higher by 1.3 percent quarter-on-quarter. Similar increases were seen in Fort Bonifacio (+1.5 percent) and Rockwell (+1.7 percent).

In the next 12 months, Colliers expects rents in Makati to grow by 5.77 percent while rental rates in Fort Bonifacio and Rockwell were seen to rise by 5.09 percent and 5.32 percent, respectively.