The residential real estate prices of various types of new housing units in the Philippines continued to grow faster in Q1 2023 at 10.2 percent year-on-year (YoY), but grew at a slower pace of 1.4 percent quarter-on-quarter (QoQ), compared with the Q4 2022 results (Figure 1).
By area, residential property prices slows YoY in NCR but rises in AONCR
On a YoY basis, growth in residential property prices in the National Capital Region (NCR) slowed to 7.3 percent as the price decline in condominium units dampened the price increases in duplexes, single-detached/attached houses, and townhouses. Meanwhile, in the Areas Outside the NCR (AONCR), residential property prices rose by 11.4 percent, with prices of all types of housing units rising, except for those of townhouses.
On a QoQ basis, residential property prices expanded by 4.4 percent in the AONCR, but contracted by 4.3 percent in the NCR (Figure 1).
Prices of all housing types increase
By housing type, prices of duplex housing units, single-detached/attached houses, townhouses, and condominium units contributed positively to the YoY growth in the nationwide RREPI as the indices increased by 22.1 percent, 17.0 percent, 1.8 percent, and 1.2 percent, respectively (Figure 2).[1]
Meanwhile, the 1.4 percent QoQ growth in the RREPI was attributed to the higher prices of single-detached/attached houses (by 4.7 percent) and townhouses (by 3.8 percent). However, prices of duplex housing units and condominium units declined by 16.4 percent and 5.1 percent QoQ, respectively (Figure 2).
Nationwide loan availments for new housing units grow at a double-digit rate YoY but fall QoQ
In Q1 2023, the number of residential real estate loans (RRELs) granted for all types of new housing units in the Philippines grew by 16 percent YoY as RRELs in the NCR and AONCR increased by 16.5 percent and 15.7 percent, respectively. However, on a QoQ basis, the nationwide growth in housing loan availments fell by 9.1 percent, following the 13.2 percent and 7.1 percent drop in RRELs in the NCR and AONCR, respectively (Figure 3).
The average appraised value of new housing units in the country stood at Php73,724 per square meter (sqm) in Q1 2023. The average appraised value per sqm in the NCR was at Php123,053, higher than both the national average and the average appraised value in the AONCR at Php51,459 (Figure 4).
The weight of each type of housing unit in the RREPI is determined by dividing the total floor area (in sqm) of a specific type of housing unit over the total floor area of all housing types. In Q1 2023, single-detached/attached houses in the RREPI continued to constitute the largest weight at 53.2 percent. Meanwhile, townhouses, condominium units, and duplex housing units accounted for 23.4 percent, 22.6 percent, and 0.7 percent, respectively (Figure 5).
Profile of residential real estate loans in Q1 2023
In Q1 2023, 80.5 percent of residential real estate loan (RRELs) transactions were used to purchase new housing units.[2] Meanwhile, by type of housing unit, most of the residential property loans were used for the acquisition of single-detached/attached houses (47.8 percent), followed by condominium units (32.8 percent) and townhouses (18.9 percent) as seen in Figure 6.
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. By region, 28.7 percent of the total number of RRELs granted were from the NCR, while the balance was from the AONCR as follows: CALABARZON (34.5 percent), Central Luzon (13.7 percent), Central Visayas (6.3 percent), Western Visayas (5.6 percent), Davao Region (2.8 percent), and Northern Mindanao (1.4 percent). NCR and the said six regions combined accounted for 93 percent of total housing loans granted by banks (Figure 6).
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.
Data for the RREPI are obtained through BSP Circular No. 892 dated 16 November 2015, which requires all universal/ commercial banks (UBs/KBs) and thrift banks (TBs) in the Philippines to submit to the BSP a quarterly report on all RRELs granted. This was supplemented by the BSP Circular No. 1154 dated 14 September 2022, which requires all digital banks (DBs) in the country to submit similar report to the BSP.
[1] Based on the average prices per sqm of duplex properties for the period, there were more high-value duplex loans granted in Q1 2023 vis-a-vis Q4 2021, causing the duplex index to rise significantly. Specifically, about 87% of the number of duplex loans granted had appraised values above the 3-year average of Php33,000 per sqm in Q1 2023 compared with only 46% in Q4 2021. Consequently, the average, median and minimum prices per sqm of duplex housing units grew y-o-y by 45.4 percent, 67.6 percent and 124.6 percent, respectively.
[2] Among the residential housing properties purchased using RRELs in Q1 2023, 19 percent were pre-owned, while 0.5 percent were foreclosed properties.
