The Philippines is undergoing some form of deurbanization as families flock to areas outside the National Capital Region (NCR) amid intermittent lockdowns due to resurgence in COVID-19 infections with the emergence of the highly transmissible Delta variant, according to Dutch financial giant ING Bank.
Nicholas Mapa, senior economist at ING Bank Manila, said the latest Residential Real Estate Price Index (RREPI) housing prices outside NCR and for single-detached units continued to pick up.
“After being locked down in the city for more than a year, it’s no surprise that there is now a natural and healthy demand for property and homes outside the city. This in turn will aid in the development of areas outside NCR as the Philippines hopes to undergo some form of deurbanization,” Mapa said.
The RREPI is an indicator of change in the prices of residential properties in the Philippines over a period of time. The growth rate of the index measures house price inflation. A rising RREPI denotes rising residential prices on average, while a declining RREPI indicates the reverse.
Based on the data released by the Bangko Sentral ng Pilipinas (BSP) last June, 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.
Residential property prices in NCR booked a double-digit 10 percent decline to 142.8 from 158.7, while the prices of housing units in areas outside NCR inched up by 0.8 percent to 127.4 from 126.4.
Likewise, 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.
Mapa said the RREPI remains in contraction as the overall market was weighed down by the steep drop in condominium prices and prices in NCR in general.
“This trend suggests that the Philippines is also experiencing the global phenomenon of migration from the urban centers to the areas outside the city with Filipinos in search of more space,” he added.
According to ING, the latest data on building permits released by the Philippine Statistics Authority (PSA) showing a stark pickup in growth was driven in large part by base effects as economic activity picked up relative to the extreme lockdowns experienced in 2020.
“This reflects pent up permits as construction activity was finally allowed to resume in some parts and on a staggered and limited basis,” the economist noted.
However, data released by the PSA showed by the total number of constructions from approved building permits fell by 28.5 percent to 123,783 in 2020 from 173,162, with the value plunging by 43.9 percent to P275,81 billion from P491.81 billion.
Data showed Cavite, Laguna, Batangas, Rizal and Quezon (CALABARZON) ranked first in terms of the number of constructions with 24,411 or 19.7 percent of the total followed by Central Visayas with 18,328 or 14.8 percent, and Ilocos Region with 12,932 or 10.4 percent.
“We would like to point out some trends such as the surge in permits in the CALABARZON region, which mirrors the recent developments we’ve noted in the BSP’s RREPI report,” Mapa said.
Despite this development, the economist said signs of a real estate bubble have yet to manifest in a palpable manner.
“BSP’s RREPI remains negative and previously frothy condominium prices appear to have been deflated by the pandemic,” Mapa added.