MANILA, Philippines — The average bank lending rate on all maturities fell to 8.85% in the first quarter of 2007. Remittances from OFWs channeled through formal financial institutions rose 19 percent to $12.76 billion in 2006 from $10.69 billion in 2005. OFW deployments to the US increased from only 4,128 in 2005 to 11,406 in 2006, or an increase of 7,278.
All these market indicators support the continued growth in the Philippine housing sector, says Chay Ong, Associate Director for Asset Services Residential of CBRE Philippines.
Aside from sustained demand for housing from OFWs, falling lending rates that are fixed for a longer payment term (i.e. 25 years to 30 years) likewise empower the emerging middle class to purchase houses and lots for their families. Overall, the stable economic climate supports market demand for major household acquisitions such as housing.
According to Ms. Ong, growth in housing demand is expected to come from key regions of the country namely, NCR, Central and Southern Luzon. In fact, OFW remittances are channeled mostly in these same regions. It should be noted that the primary considerations of OFWs when they go abroad are education for the children and housing. Thus, housing developers with projects in these regions are expected to continuously benefit from the pent-up demand for housing from the emerging class.
Moreover, developers are also expanding their product choices to suit a broader market base. Apart from house and lot packages ranging from P1.5m to P2.5m, medium-rise buildings (MRB) are getting attention to the upcoming professional in the urban centers. Condominium dwelling which use to cater to the upper class is now open for a broader market particularly for those who live and work in the urban centers. All these are made possible by the competitive financing schemes made available for government financial institution (e.g. Pag-IBIG) and local commercial banks.
Therefore, with end-user demand for housing fuelling the growth in the housing sector, we expect the segment to register double-digit growth in the short-to-medium term.
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