Q2 home prices hit slowest pace on record
Home prices grew at their slowest pace on record in the second quarter, with high interest rates expected to put further pressure on the property market and keep the sector from making a meaningful contribution to economic growth.
The cost of various types of homes in the country, as measured by the residential property price index (RPPI), rose 0.4 percent from a year earlier in the three months through June, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.
That was the slowest annual increase in comparable data dating to the first quarter of 2019. On a quarter-on-quarter basis, the index edged up just 0.1 percent.
The RPPI, a tool for assessing real estate and credit market conditions in the Philippines, replaced the previous residential real estate price index. The BSP said the new measure improves on the previous gauge by accounting for property-specific characteristics, including location, size and type.
Outside Metro Manila
Home prices outside the capital region fell 2.7 percent from a year earlier, the first contraction on record. That decline was offset by a 5.2-percent increase in the National Capital Region, the fastest pace of growth in more than a year.
By type of housing, condominiums led the gains, with prices rising 6 percent, driven by higher values in Metro Manila. House prices, however, fell 4.1 percent.
The demand picture was mixed.
The number of housing loans approved by banks rose 3.1 percent, accelerating from a 1.3 percent increase in the first quarter. On a quarter-on-quarter basis, mortgage lending increased 7.2 percent.
Approved home loans in Metro Manila rose 11 percent, while those in areas outside the capital declined 0.1 percent.
The property market is now moving through a boom-and-bust cycle, according to Andrea Pescatori, head of the visiting staff from the International Monetary Fund.
Speaking at a press conference following consultations with local authorities, Pescatori said higher interest rates resulting from the BSP’s tightening cycle could put further pressure on the real estate sector.
“We don’t see it (property sector) as a contributor to growth,” he said. “We see some downside risk, but we also don’t see it as a sector that is threatening growth. It’s more or less neutral at the moment.”
