THE local financial and housing sector echoed the results of the recently published residential real estate price index (RREPI) of the central bank, saying the indicator confirms that there is no real estate bubble in the country yet.
“We confirm BSP’s (Bangko Sentral ng Pilipinas) findings that there is no asset bubble in the country presently. Developers continue their projects in Cebu...and banks continue to have confidence (to) lend to these developers and buyers of their property development,” said Cebu Bankers Club (CBC) president Maximo Rey Eleccion.
The BSP said real estate prices exhibited a 9.2-percent overall rise year-on-year in the first quarter of 2016. The central bank compiled the RREPI through its surveys of 93 banks and the housing loans they have approved from January to March this year.
Specifically, in Metro Manila, property prices increased by 9.7 percent last quarter, while areas outside it saw an increase of 9.4 percent.
A real estate bubble happens when developers continue to build projects based on a projected demand, and it bursts when this demand doesn’t meet expectations, causing prices to fall steeply.
As for the type of development, BSP’s findings show that prices of condominium units increased the most, jumping by 12.9 percent in the first quarter compared to last year.
Condominiums also were the most common purchases in the National Capital Region (NCR), while single detached houses were the preferred purchases outside the capital.
Meanwhile, townhouse prices increased by 8.5 percent annually, the data showed.
“The BSP property index for me is designed to help the market in property valuation. Once the BSP goes deeper, the banks (and) BSP can monitor if the average price increase of the developer is realistic,” said Cebu Real Estates Board (Cereb) past president Samuel Lao.
Lao, a broker, believes the housing prices followed by developers is above the market price.
“Most pricing is dictated by the developer, and if you compare it with the market price, it is way above the reality. The problem here is if the buyer defaulted the bank, the bank can hardly resell its assets,” he told Sun.Star Cebu on Monday.
In Cebu, synergies among big property developers have been observed for the development of multi-billion peso mix-used projects. Among the most recent announcements include the Ayala Land and AboitizLand partnership for Gatewalk Central and Hongkong Land and Taft Properties’ Mandani Bay, both in Mandaue City.
“I believe there is no asset bubble. It is just that there might be more supply in a certain segment. But overall, demand is still very high, especially in the economical and socialized housing segment,” said Grand Land president Ryan Bernard Go, in a text message yesterday. The developer said his company is enjoying the influx of foreign buyers of its condominium units.
AboitizLand chief operations officer Patrick Reyes said the positive property index is seen to further drive sales of real estate products.