Does Philippine real estate need alternative funding?
Does Philippine real estate need alternative funding?
No housing bubble on the horizon
The Philippines’ property market is not in danger of a housing bubble, a ranking official at the central bank reassured investors yesterday, reported BusinessWorld. However, funding for real estate developments remains an area for improvement.
“Despite strong demand, some developers experience tightness in financing for huge real estate projects,” Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said at the Philippine Housing Finance Conference. “There is a need for new, alternative mechanisms — probably a more creative, imaginative way in providing financing to the industry to fund long-term needs for real estate.”
More: Optimism in the Philippines is boosting the region’s business sentiment
The state bank revealed last month a 20-percent spike in property loans between the first half of 2016 and the same period last year. The loans hit PHP1.138 trillion (USD23.6 billion), 75 percent of which went to developers and contractors.
BSP Governor Amando Tetangco Jr this week declared “no evident sign of a bubble” in the real estate sector. “We can say that the real estate sector is in a good position at this point,” he said.
Guinigundo highlighted that the growth in home values across the Philippines hinge on remarkable demand, with no oversupply in sight. According to the bank’s Residential Real Estate Price Index, home values nationwide grew 9.2 percent year-on-year in the first quarter on the back of spectacular growth in condominium prices, which rose 12.9 percent over the same period.
Read next: How Duterte’s federalism could diversify the Philippine property sector
Source: Property Report