Gov’t hikes low-cost housing ceiling to P2.5 million

Low-cost housing developers welcomed a joint declaration by the Department of Human Settlements and Urban Development and National Economic and Development Authority increasing the price ceiling for economic housing from P1.7 million to P2.5 million, according to a report by Manila Standard.

Subdivision and Housing Developers Association Inc. chairman George Siy said the adjustments considered the income and affordability of home buyers, aside from costs of production inputs.

He said the new direction on pricing would have positive repercussions on the housing industry as developers would be encouraged to continue building more low-cost housing units for the population.

Developers were pushing for the price adjustments, underscoring the need to align with economic events in the last six years, given substantial increases in costs of production inputs like land, labor, transport, construction materials and other costs of doing business.

The inflationary effect widened on increased economic activities, logistic bottlenecks, currency depreciation and political events like sanctions on international trade, the group said.

The DHSUD issued an order on June 10, 2022 which provides the new pricing would apply to new projects to be launched. It said that projects with existing licenses to sell, the new price ceiling would apply to unsold and unconstructed low-cost housing units.

SHDA said increasing the price ceiling would attract more developers to produce units under economic and socialized housing that would help address the housing backlog in the Philippines, which is forecast to reach 6.5 million units by 2030.

The group said that if neglected, the housing need of the Philippines would exceed 22 million units by 2040, based on latest data. It said that to close the gap, the industry should increase production beyond the current rate of 250,000 houses a year.

Siy said the housing sector is an economic pump-primer as it has a 3.4 output multiplier effect to the economy. It also supports 80 allied industries and involves all sectors, including women, children, vulnerable groups and health.

Housing generates substantial direct employment, with an average of 120 and more man-days for the construction of each basic housing unit.

SHDA, together with other housing organizations, also initiated discussions with the DHSUD and NEDA to determine price adjustments for socialized housing, after the adjustments were made on economic housing.

The proposal, similar to economic housing pricing, considered the upticks in input cost and income of the population, especially those in the lower 30 percent of the income groups.