Addressing the unserved housing segment

After the luxury and high-end housing segment, there’s mid-cost, low-cost, economic, socialized, and then there’s the unserved — a term that describes the poor and low-income Filipino families who can’t afford nor qualify for socialized housing programs. Overall, the Philippines’ estimated housing needs are expected to reach 15 million by 2022. This and more red flags were reported at the recent BAHAYnihan: Rising Together Through Housing event by Habitat for Humanity Philippines.

In partnership with the University of Asia and the Pacific’s (UA&P) Center for Research and Communication and Terwilliger Center for Innovation in Shelter, BAHAYnihan launched two studies that touch the core of the country’s current housing problem. Clearing the housing backlog: An updated supply and demand study on unserved owner-driven construction segment in the Philippines reports the unserved segment’s size and market potential, while Impact of COVID-19 on the low-income housing market systems in the Philippines reveals the revenue losses for manufacturers and retailers during the pandemic.

‘Clearing the housing backlog’

Written by UA&P president Dr. Winston Conrad “Stan” Padojinog and Erica Myra Yap, the study shows that about six million households are unserved, lack purchasing power and have no access to financing programs offered by the government and private institutions. More than half (55 percent) of this group belong to the owner-driven construction (ODC) segment.

ODC is defined as “a housing segment characterized by (1) security of land tenure; (2) daily income ranging from $5 to $15 or a maximum annual income of P90,000 to P270,000 based on the prevailing exchange rate of P50:$1 (according to Philippine Statistics Authority and World Bank data); (3) ownership of a residence which may start as a ‘temporary’ housing unit but which they are willing to invest in and upgrade; and (4) usually rural or peri-urban location.”

The reports say that ODCs are high in numbers in Regions VII, XII and IV-A (particularly the provinces of Cebu, Davao del Sur and Leyte and the cities of Davao, Cebu and Bacolod), and low in NCR and Cordillera Administrative Region.

This could have been curbed if government policy and private sector initiatives didn’t shift to mid- and to upper-class housing (due to higher profit margins) and to other non-housing construction projects, according to the report. It also concluded that the government’s housing-related policy direction does not directly address the unserved segment nor the backlog.

In her comment, National Economic and Development Authority (NEDA) Undersecretary Rosemarie Edillon shares the midterm update of our Philippine Development Plan (PDP) and mentioned that some of the study’s recommendations are consistent with PDP’s current strategies.

“The report’s recommendation is on offering affordable financing assistance and schemes and indirect government subsidy, including the channeling of private developer compliances on balanced housing requirements. The updated PDP talks about implementing innovative housing finance modalities — of course, the institutional policy reforms to be the platform of all this — to accelerate housing microfinance to be formulated by the newly created Department of Human Settlements and Urban Development (DHSUD),” says Edillon.

“We have actually listed some possible financing strategies like direct subsidies of course through housing vouchers, public rental housing, housing microfinance models, and probably even Islamic housing schemes. This is really to ensure that the rationalized tax incentives for socialized housing are in compliance with the TRAIN Law — that’s RA 10963 — and that we want that it will directly benefit the low-income household.”

The study recommends that the government, through DHSUD and LGUs, private sector developers, and NGOs like Habitat for Humanity partner and explore requirements under balanced housing in RA 10884 or under the BALAI program. This will provide opportunities for ODCs to significantly improve their lot and living conditions in a shorter period of time.

‘Impact of COVID-19 on the low-income housing market systems in the Philippines’

The second study authored by Habitat’s Terwilliger Center and undertaken from June to July — reveals that the health crisis had resulted in revenue losses of 50 to 60 percent for manufacturers and as much as 87 percent for retailers. It also shows that about half of construction projects are canceled or postponed, causing unemployment or displacement of construction workers.

Aside from analyzing the economic and social impact of COVID-19 on the low-income housing market systems in the country, the study also identifies current challenges and opportunities for the housing market industry and provides recommendations on how to deal with the crisis to prevent collapse of the housing market and build resilience toward future disasters.

It concludes that without strategic support, “the low-income housing sector can get to a downturn which would require a reboot.” The PDP (2017-2022) and AmBisyon Natin 2040 targets might not be achieved without cash provision, safety net support and stimulus packages for the sector.

It proposed a number of strategic intervention areas, from financial education among low-income households to clear policy guidelines when disbursing emergency subsidies to the low-income population.

Read the full studies at

For DHSUD’s reaction, Director Rowena Dineros discusses the new department’s interventions during the pandemic, including the three-month moratorium on loan payments and the collaboration with Subdivision and Housing Developers Association (SHDA) and Habitat for Humanity in Local Shelter Planning.

There are three million ‘unserved ODC’ Filipino households. The government, through DHSUD and LGUs, can partner with private sector developers and NGOs to explore opportunities for ODCs to significantly improve their living conditions in a shorter period of time. PHOTO BY SITOY TANO

Speaking on behalf of the private sector, engineer Marcelino Mendoza, chairman of the board of the Organization of Socialized and Economic Housing Developers of the Philippines Inc. (OSHDP) and former chairman of the Board of Vista Land & Lifescapes and president of Camella Homes, says that the best intervention the government can do is to increase the national funding for housing.

“Dr. Stan’s study correctly points out, the budget for housing has always been meager. It’s only 0.08-percent share of the total P4.5 trillion budget at P4 billion. But what I would like to point out will be the missed opportunities that the new Department of Human Settlements are mandated to undertake but will not be pursuing: (1) Develop and manage idle government land; (2) Take over undeveloped and abandoned subdivisions; and (3) Manage and oversee the development of proclaimed socialized housing sites,” he expresses.

Last month, the Department of Budget and Management approved only P3.9 billion of the DHSUD’s proposed budget of P76 billion for 2021. It has a budget of P7.83 billion for 2020.