THE move to update the price ceiling for socialized housing is seen to bolster real estate activities as it addresses the ballooning housing backlog of the country.
The government, according to real estate stakeholders, is looking at increasing the price cap for socialized housing from P480,000 to P1.8 million for vertical projects to cater to the Pambansang Pabahay Para sa Pilipino (4PH) Program.
Joe Soberano, president and chief executive officer of Cebu Landmasters Inc., (CLI) said the adjustment will encourage more real estate players to serve this market as it will now be economically viable for them, thus helping the country solve its six million housing backlog.
Soberano said this adjusted price ceiling only applies to vertical projects with 10 floors and above.
“With this kind of (price) ceiling, this will encourage more developers to build. This is very favorable for developers... because you are hitting the level of the economic side of the market,” he said.
“This is encouraging, something that CLI will be pursuing,” Soberano added.
Break even
Real estate players and groups have been asking the National Economic and Development Authority and Department of Human Settlements and Urban Development to increase the price cap for socialized housing as the cost of construction materials and labor have changed over the years.
Soberano said the previous price ceiling was a challenge for developers to even break even.
Under the current price ceiling law, the price for a 22-square-meter (sq.m) socialized horizontal housing unit is P480,000. A 24-sq.m. property costs P530,000 and a 28-sq.m. unit is at P580,000.
“The higher price ceiling applicable to socialized condo can encourage developers to build this type of development,” said Ramiro Espina, Primary Homes’ vice president for sales and marketing.
The socialized condo will target the C market, which also has an increasing demand and a wide supply backlog, he explained.
“This type of development will be attractive to them provided it’s in an urban location. In a rural setting though, horizontal development is still preferred,” Espina noted.
Soberano admitted that choosing locations would now be a challenge for developers.
“We have to make sure that the locations would be convenient to the target market and at the same time affordable,” he said.
Better location
The 4PH Program focuses on developing low, mid to high-rise projects near the sources of livelihood of target beneficiaries. This program specifically targets low-income earners.
According to the consolidated housing data based on the local shelter plan as of June 2023, the country logs a housing backlog of 6.658 million, of which 3.753 million are for informal settler families.
Of the total housing backlog, Metro Manila records 3.370 million housing needs, while Visayas logs 1.540 million and Mindanao logs 1.747 million.
“4PH is meant for the urban poor to have access to housing at good locations. It is a game changing proposition,” said Marcelino Mendoza, chairman of the Organization of Socialized and Economic Housing Developers of the Philippines Inc. (OSHDP).
“We are optimistic (on this program). We want the 4PH to succeed,” he added.
In a joint position paper in 2022, OSHDP, National Real Estate Association and the Socialized Housing Developers Association proposed higher price caps and lower floor and lot areas on socialized housing.
The groups are proposing a price ceiling of P800,000 with floor area of 22 sq.m. and lot area of 32 sq.m. for horizontal housing from P580,000 with floor area of 32 sq.m. and lot area of 40 sq.m.
For vertical housing, the groups propose a P1.5 million cap for a floor area of 22 sq.m. from the current P750,000 on a 24 sq.m. floor area. (KOC)