Prices of condominium units dropped for the third straight quarter, pulling down national housing prices in the first quarter of the year amid tepid demand caused by the impact of the COVID-19 pandemic.
Based on the latest Residential Real Estate Price Index (RREPI) released by the Bangko Sentral ng Pilipinas (BSP), the price of condominium units fell by 10.7 percent to 163.2 in the first quarter of the year from 182.7 in the same quarter last year.
Prices of condo units also declined by 15 percent in the third quarter and by 8.4 percent in the fourth quarter of last year.
“This is the third consecutive quarter that condominium prices declined, owing to the lackluster demand for condominiums in NCR,” the central bank said.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the decline in property prices is a healthy correction amid the reduced demand for residential real estate particularly condo units after a boom in the Philippine offshore gaming operators (POGOs) prior to the COVID-19 pandemic.
“Some downscaling of POGOs in the country due to the pandemic as well as some tax issues also caused the healthy downward correction in rental or lease rates and capital values in the property market,” Ricafort said.
Likewise, the BSP said the price of duplex housing units plunged by 20.7 percent to 132.6 from 167.3.
On the other hand, prices of townhouses increased by 8.3 percent to 157.2 from 145.1, while that of single detached or attached houses inched up by 0.2 percent to 115.6 from 115.4.
As a result, the RREPI contracted by 4.2 percent to 132.2 in the first quarter of the year from 138 in the same quarter last year primarily driven by the fall in prices of condominium units and duplexes.
The nationwide house prices in the first quarter were also 1.6 percent lower the 134.4 booked in the fourth quarter of last year due to the lower prices of duplexes, townhouses, and single detached or attached houses, which more than offset the higher prices of condominium units.
“Nationwide house prices contracted due to the subdued demand for residential prices amid the pandemic,” the BSP said.
The RREPI, launched in the first quarter of 2016, is used as an indicator for assessing the real estate and credit market conditions in the country
“Less POGOs, other expats, and the sharp reduction of foreign tourists in the country amid travel restrictions since the pandemic reduced the demand for residential real estate and for other housing or accommodation facilities,” Ricafort said.
Data from the central bank also revealed residential property prices in NCR booked a double-digit 10 percent decline to 142.8 in the first quarter of the year from 158.7 in the same quarter last year.
“This was due to the decrease in the prices of condominium units, which outweighed the increase in the prices of duplexes, single detached or attached houses, and townhouses,” the BSP said.
On the other hand, the central bank said property prices in areas outside NCR inched up by 0.8 percent to 127.4 from 126.4.
Bulk or 52 percent of the residential real estate loans were used for the acquisition of condominium units, followed by single detached or attached houses with 38.6 percent, townhouses with 8.1 percent, and duplex with 1.1 percent.
Earlier, BSP Governor Benjamin Diokno said asset pressure remains manageable despite the massive P2.2 trillion released into the financial system via the COVID-19 response measures.
“Property prices, for instance, remain broadly in line with market fundamentals and within historical range. The likelihood of asset price inflation due to a credit boom is also reduced by weak economic activity and banks’ risk aversion as these tend to dampen asset price movements and lending activity, respectively,” Diokno said.
