Industry groups unveil 15-year Philippine Housing Roadmap

Industry groups have unveiled the Philippine Housing Roadmap for 2025 to 2040, a 15-year plan aimed at addressing the country's significant housing shortage.

Economist Dr. Bernardo M. Villegas of the Center for Research and Communication (CRC) said his organization collaborated with the Subdivision and Housing Developers Association (SHDA), the Organization of Socialized and Economic Housing Developers of the Philippines (OSHDP), the National Real Estate Association (NREA), and the Chamber of Real Estate and Builders’ Association (CREBA) to develop the roadmap.

Villegas noted in his BusinessWorld column that despite milestones since the last housing roadmaps in 2012 and 2016, such as the creation of the Department of Human Settlements and Urban Development (DHSUD) and incentives for socialized housing, the Philippines continues to face a severe lack of housing for low-income households.

He said that housing production remains below targets, with less than 100,000 units constructed annually out of the one million units the DHSUD aimed for over the current administration's six-year term.

The widening gap between housing demand and supply, coupled with rising construction costs and an increasing number of marginalized households, necessitates a more coordinated approach between the public and private sectors, the roadmap emphasized. It stated that the availability of housing, whether owned or rented, is crucial for societal stability.

While recent adjustments to socialized housing price ceilings, value-added tax (VAT) exemptions, and housing subsidies offer some relief, the roadmap indicated that fiscal support and collaboration among government agencies, developers, housing associations, and financing institutions remain insufficient, he said.

The roadmap, prepared by a team led by Dr. Winston Padojinog, aims to coordinate the efforts of all housing sector stakeholders to tackle the substantial housing backlog, estimated at 12.4 million in 2023 and projected to reach 16.6 million by 2040 if current trends persist.

According to the roadmap, the stakeholders envision a collaboration between the public and private sectors to provide housing solutions and eliminate the backlog by 2040, ensuring every family has equal access to decent, affordable, safe, resilient, and sustainable housing regardless of economic status.

To achieve this vision, the four associations, in cooperation with the government, outlined the following goals:

·        Increase the production of decent, safe, affordable, and sustainable housing based on targeted needs and market segments in each region.

·        Mobilize funding for public and socialized housing and encourage investments in affordable housing.

·        Bridge end-user financing and affordability gaps.

·        Improve the housing regulatory environment.

·        Encourage the establishment of decent, safe, resilient, sustainable, and affordable housing units and communities.

The roadmap identifies several weaknesses and threats within the Philippine housing industry, including unclear roles between the government and private sector, unresponsive price ceiling adjustments, a lack of diversity in socialized housing development, uncertainty regarding income tax holidays for economic and low-cost housing providers, the absence of a regulatory framework for sustainable housing, affordability gaps, over-reliance on domestic capital, limited government budgetary allocations, and bureaucratic delays.

To address these issues and improve affordability, the roadmap recommends a clear delineation of roles between the government and private developers, with the government focusing on public and socialized housing for lower-income households and informal settlers, while private developers concentrate on mid- to upper-income segments and explore alternative development approaches. It also emphasizes the need to allocate funds for socialized housing and expand incentives for economic and low-cost housing developers.

The roadmap suggests enhancing public housing options through long-term leases and interest expense subsidies, improving access to developmental funding, supporting affordable end-user financing, increasing budget allocations for public and socialized housing, streamlining regulations, and encouraging green building practices.

Specific programs recommended include a co-production model where the government provides land and the private sector constructs housing units, adopting diverse housing development approaches, considering alternative balanced housing compliances, and utilizing the housing escrow fund for socialized housing production.

The roadmap also stresses the need to create an investment-friendly regulatory environment by streamlining permitting processes, rationalizing professional accreditation, and reviewing land conversion initiatives. It advocates for a regulatory framework for green and resilient housing, supported by incentives and partnerships for skill training and domestic industry growth.

The roadmap pushed for reinforcing production targets, estimating public and private capital requirements and projecting the economic impact of the housing sector on the national economy by 2040.