Residential real estate loans contract 10.3% in Q4 2022

RESIDENTIAL Real Estate Loans (RRELs) contracted 10.3 percent in the last quarter of 2022, according to the latest data released by the Bangko Sentral ng Pilipinas (BSP).

Based on the data, RRELs in the National Capital Region (NCR) and Areas Outside NCR (AONCR) contracted by 22 percent and 3.4 percent, respectively.

“Most of the RRELs granted in the NCR were for the purchase of condominium units, while RRELs granted in the AONCR were for the purchase of single-detached/attached houses,” the BSP said.

On a quarter on quarter basis, the nationwide availment of housing loans declined by 4.5 percent.

This was driven by the larger decline in RRELs in NCR at 23.5 percent. This was despite the 8.5 percent growth in RRELs in the AONCR.

In the fourth quarter, BSP said 81.1 percent of RRELs were used to purchase new housing units.

By type of housing unit, most of the residential property loans were used for the acquisition of single-detached/attached houses at 47.2 percent.

This was followed by condominium units, which accounted for 33 percent of the total and townhouses at 18.9 percent.

By region, BSP said 30.5 percent of the total number of RRELs granted was from the NCR, while the balance was from the AONCR.

The data also showed the Calabarzon region accounted for 33.7 percent of the total in AONCR followed by Central Luzon at 12.9 percent and Central Visayas at 6.9 percent.

The BSP said Western Visayas accounted for 5.9 percent of the RRELs in AONCR followed by Davao Region at 3 percent; and Northern Mindanao at 1.5 percent.

“NCR and the said six regions combined

DESPITE the oil price rollback and cheaper fruits and vegetables, the Bangko Sentral ng Pilipinas (BSP) still expects inflation to be above 8 percent in March 2023.

The BSP said inflation might have averaged 7.4 percent to 8.2 percent in March. Apart from petroleum and fruits and vegetables, lower chicken and sugar prices may have also contributed to this.

However, the BSP said inflation might continue to be high due to the recent increase in prices of electricity and select

“Upward price pressures for the month are expected to emanate from higher electricity rates in Meralco-serviced areas as well as increased prices of other key food items, such as pork, fish, eggs, and rice,” the BSP said.

“Going forward, the BSP remains prepared to respond appropriately to continuing inflation risks in line with its data-dependent approach to monetary policy formulation,” it added.

On Friday, Ibon Foundation Inc. said the increase in prices already merits a wage hike, stressing the minimum wage has not been enough for many Filipino families to live decently.

Citing data from the 2020 Annual Survey of Philippine Business and Industry (ASPBI), Ibon said 238,036 establishments of all employment sizes have P1.8 trillion in total profit and 6.2 million employees.

Raising the P442.97 average daily basic pay of workers to, say, P750 will only transfer 29.2 percent of these profits.

Ibon is also proposing wage subsidies for micro and small establishments that would cover the total cost of the proposed wage hike for one year—P64.6 billion for micro and P159.8 billion for small enterprises.

In February 2023, the Philippine Statistics Authority (PSA) reported that inflation averaged 8.6 percent. This was slightly lower than the 8.7 percent reported in January 2023.

However, economists and PSA were quick to point out that core inflation was the indicator to watch as it reached 7.8 percent in February. The PSA said this is the highest since March 1999 when it was at 8.1 percent. PSA said this meant core inflation has been steadily increasing for the past 13 to 14 months. Core inflation excludes certain highly volatile food and non-food items.

WB trims PHL’s 2023 growth forecast from 5.8% to 5.6%

THE Philippine economy may post an even slower growth this year as inflation continues to increase, according to the World Bank (WB).

In its latest East Asia and the Pacific (EAP) Economic Update for April 2023, the country’s gross domestic product (GDP) is expected to post a growth of only 5.6 percent this year, lower than the 5.8 percent forecast it made in October 2022.

The WB said among the larger economies of the region, most, including Indonesia, the Philippines, and Vietnam, are anticipated to grow more modestly in 2023 than in 2022.

“Most major economies of East Asia and the Pacific have come through the difficulties of the pandemic but must now navigate a changed global landscape,” World Bank East Asia and Pacific Vice President Manuela V. Ferro said.

“To regain momentum, there is work left to do to boost innovation, productivity, and to set the foundations for a greener recovery,” she added.

experienced relatively strong growth.

However, the report stated that the growth in transportation, accommodation and catering sectors in the Philippines and Thailand as well as construction and real estate in Malaysia and Philippines, were still below pre-pandemic levels.

The report noted the consumer price inflation (CPI) also increased in most EAP economies on the back of “rising energy and food prices as well as idiosyncratic factors.”

“Core and nominal CPI inflation have surpassed central banks’ target ranges in most major EAP economies. While inflation has recently peaked in several economies, it continues to rise in the Philippines and Vietnam, and remains high in Lao PDR, Mongolia, and Myanmar,” the report stated.

The WB said most countries in the EAP region have seen two decades of higher and more stable growth than economies in other regions. The result is a striking decline in poverty and, in the last decade, also a decline in inequality.

Addressing the significant “reform gap,” especially in services, could magnify the impact of the digital revolution and boost productivity in sectors from retail and finance to education and health.

“De-globalization, aging, and climate change are casting a shadow over the growth prospects of a region that has thrived through trade and is growing old fast,” said

WB East Asia and Pacific Chief Economist Aaditya Mattoo. “However, promoting trade, addressing population dynamics, and enhancing climate resilience could strengthen growth.”

The WB said economies of the region must also cope with three important challenges as policymakers act to sustain and accelerate economic growth in the aftermath of Covid-19.

Rising tensions between major trading partners will affect trade, investment, and technology flows across the region.

The rapid aging of the major economies of East and Southeast Asia heralds a new set of challenges and risks with implications for economic growth, fiscal balances, and health.

Finally, the region is particularly exposed to climate risks, in part due to the high density of population and economic activity along its coasts. Cai U. Ordinario accounted for 94.4 percent of total housing loans granted by banks,” BSP said.

The residential real estate prices of various types of new housing units in the Philippines rose faster in the last quarter of 2022 by 7.7 percent year-on-year.

On a quarter on quarter basis, this was slower at 2.2 percent compared with the 4.6 percent posted in the third quarter of 2022.

Residential property prices in NCR grew by 16.1 percent as all types of housing units registered price increases.

In AONCR, residential property prices increased by 4.5 percent, with prices of all types of housing units rising, except for those of townhouses.

“On a quarter on quarter basis, residential property prices expanded by 4.8 percent in the AONCR, but contracted by 2.4 percent in the NCR,” BSP said.

In the last quarter of 2022, prices of duplex housing units jumped 42.9 percent, while condominium units saw a 12.9 percent increase during the period. The price of single-detached/attached houses increased 10 percent.

The RREPI is a measure of the average change in the prices of various types of housing units, i.e., single-detached/ attached houses, duplex housing units, townhouses, and condominium units, based on banks’ data on actual mortgage loans granted to acquire new housing units only.

It is a chain-linked index, which is computed using the average appraised value per square meter, weighted by the share of floor area of each type of housing unit to the total floor area of all housing units.

The RREPI is used as an indicator for assessing the real estate and credit market conditions in the country. The BSP has been releasing the report since June 2016. Cai U. Ordinario