THE LOCAL property sector is far from seeing a bubble, the Bangko Sentral ng Pilipinas (BSP) chief said, with strong demand and prudence among developers seen to drive “sustainable” growth in the local industry.
“There are no evident signs of a bubble in the real estate sector today. You see there continues to be a strong demand for housing,” BSP Governor Amando M. Tetangco, Jr. said in a Friday briefing at the central bank headquarters in Manila.
“You have a young and economically active population and because demographics are really a topic of society, it doesn’t just change overnight. The progress of the housing sector is expected to be sustainable.”
An increasing number of workers who choose to stay in homes closer to their workplaces is boosting demand for residential units, Mr. Tetangco said, pointing out “changes in lifestyle” among the country’s growing labor force.
“Plus of course there is a burgeoning BPO (business process outsourcing) sector, which has driven a strong demand for commercial space. All of these put together we can say that the real estate sector is in a good position at this point,” the central bank official added.
An asset bubble forms due to a perceived rising demand in housing units that drive developers to build more, and is said to “burst” as demand stagnates, which will lead to an abrupt drop in property prices.
The BSP has been keeping an eye on the property market following the 1997 Asian financial and the 2008 global economic crises. The cost to acquire homes rose by 9.2% from a year ago as of the first quarter, according to the central bank’s latest price index released last June.
Mr. Tetangco said property developers have also exercised prudence in construction, as they now build units based on demand — which, in turn, makes for a “healthier” real estate sector.
BSP PARTNERS WITH HLURB
Also on Friday, the BSP and other agencies under the Financial Stability Coordination Council signed a memorandum of agreement with the Housing and Land Use Regulatory Board (HLURB) for data sharing to better monitor the real property sector.
HLURB chief executive officer and commissioner Antonio M. Bernardo said the information sharing would help the government “mitigate systemic risks” in the sector, particularly with the emerging shadow banking trend in terms of financing property loans.
Philippine banks extended P1.138 trillion in real estate loans during the first half of 2016, a fifth higher than the P949.88 billion tallied a year ago, based on central bank data. This accounted for 19.2% of banks’ total loan portfolio as of end-June.