Philippines' condo available supply expands

The Philippines' residential property market is seeing a rise in condominium supply, particularly in Metro Manila's central business districts (CBDs), according to Global Property Guide.

In the third quarter of 2024, the average price of a luxury 3-bedroom condominium unit in Metro Manila's CBDs rose modestly by 2.95% to PHP 206,800 (US$3,514) per square meter (sqm), based on figures from Colliers International. When adjusted for inflation, luxury property prices in the CBDs were up slightly by 1% year-on-year in Q3 2024.

On a quarterly basis, house prices rose marginally by 0.49% in Q3 2024 (essentially flat after inflation).

The Philippine housing market experienced a boom from 2010 to 2018, with house prices in CBDs rising by 125% (77% inflation-adjusted). However, a slowing domestic economy coupled with the US-China trade war led to a sharp slowdown in 2019, with house prices rising by a meager 0.9% and falling by 1% when adjusted for inflation. The COVID-19 pandemic further exacerbated the situation in 2020, causing house prices to plummet. Philippine house prices fell by 14.55% (inflation-adjusted) in the third quarter of 2020 and were ranked among the worst-performing housing markets globally that year. Metro Manila CBD house prices plunged by 20.16% (inflation-adjusted).

The housing market started to recover in 2022, with prices increasing by 3.93% but still declining by 3.82% in real terms due to high inflation. Prices in the CBDs were up by another 3.98% in 2023 but remained more or less flat after inflation.

The outlook for the remainder of the year is for a stagnant housing market with limited price increases as demand weakens. Colliers International believes the central bank's recent interest rate cut from 6.5% to 6% in August 2024 might help revive demand, although it may not immediately translate into lower mortgage rates. They recommend developers maintain or enhance current promotions to stimulate sales in the pre-selling condominium market.

The Philippine economy grew by 5.6% in 2023, following expansions of 7.6% in 2022 and 5.7% in 2021, and a contraction of 9.5% in 2020. This growth was buoyed by strong domestic demand, particularly household consumption and public infrastructure investments. However, the country's economic growth in the third quarter of 2024 was 5.2%, marking the second-weakest performance since the pandemic. The government still expects the economy to grow between 6% and 7% this year.

Nationwide, house price increases are slowing. In the second quarter of 2024, the nationwide residential real estate price index rose by a modest 2.7% (fell by 1% in real terms) as compared to a year earlier, according to figures released by the Bangko Sentral ng Pilipinas (BSP).

The second quarter of 2024 saw the following trends by property type:

Single detached/attached houses: Prices rose by 1.7% year-on-year (fell by 1.9% in real terms). Quarterly, prices were up by a modest 3.2% (3.2% inflation-adjusted).

Duplex houses: Prices saw the biggest year-on-year growth of 27.1% (22.5% inflation-adjusted) but fell by 2.3% quarter-on-quarter (2.3% inflation-adjusted).

Condominium units: Prices rose strongly by 10.6% (6.6% inflation-adjusted) year-on-year and 4.2% quarter-on-quarter (4.2% inflation-adjusted).

Townhouse prices: Prices fell slightly by 0.8% year-on-year (-4.4% inflation-adjusted) and by 2.6% quarter-on-quarter (2.6% inflation-adjusted).