Government halves number of low-cost housing units it aims to build by 2028

The Department of Human Settlements and Urban Development (DHSUD) on Monday said that it is cutting by half the number of low-cost housing units it is targeting to build by 2028 because of delays, including in getting financing for housing developments.

“Dati 6 million [units], e hindi matatapos yung 3 million,” DHSUD Secretary Jose Rizalino Acuzar told state television PTV.

(It was 6 million units before, but we cannot finish some 3 million units.)

Among the challenges DHSUD is facing is the long processing times — around 9-12 months — for bank loans to housing developers.

 “Kaya, pero matagal. Siyempre pag pumunta ka sa bangko, hahanapan ka ng documentation,” he said.

(It can be done, but it takes a long time. Of course, if you go to the bank, they will ask you for documentation.)

He said that the delays in funding have meant that only 140,000 units of the 1 million a year that the Marcos Jr. administration originally promised have been built.

The administration is looking at a new scheme where the government would borrow the loans and serve as the developer, Acuzar, a real estate developer before joining government, said.

“Instead na private, si gobyerno na kasi si gobyerno puwede mangutang… government-to-government so medyo madali,” he said.

(Instead of private contractors borrowing from banks, the government will be the one to take out the loans… It will be easier because we can do transactions between government offices.)

In 2022, the DHSUD committed to building 1 million housing units annually to address the Philippines’ 6.5-million backlog in residential spaces.

 In 2023, President Ferdinand Marcos Jr. reiterated that promise, noting that his administration is working to construct 1.2 million housing units by the end of that year.

Source: ABC

Building permit approvals pick up by 12.8% in April

Approved building permits rose by 12.8% in April, a reversal from a 12.2% drop a year ago, the Philippine Statistics Authority (PSA) said in a report.

Preliminary data showed that building projects covered by the permits totaled 13,332 in April from 11,822 a year ago.

April’s year-on-year growth was also a turnaround from the revised 14.2% contraction in March.

Building projects in April covered 3.35 million square meters (sq.m.) of floor area, up by 35.5% year on year.

Construction projects represented by the permits were valued at P39 billion, up 30.8% from P29.82 billion a year ago.

The double-digit year on year growth rate in building permits is partly due to lower base effects amid the continued growth in the country’s economy as reflected by the gross domestic product (GDP), as well as the recovery of many industries with the lifting of Covid-related restrictions in July 2023, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said.

“The economy continued to recover and continued to benefit the [real estate and property] industry, especially in high-growth areas around the country as manifested by the boom in [real estate and property] prices in recent [months],” he added.

The country’s economy grew by 5.7% in the first three months of the year.

Permits for residential projects, which accounted for 65.7% of the total, rose 9.6% to 8,764.

These projects were valued at P17.09 billion, against the P12.95 billion recorded a year earlier.

Single homes made up 82.2% of the residential category with approved permits inching down by 0.2% to 7,202.

Applications for apartment buildings grew by 111.1% to 1,421 while applications for duplex or quadruplex homes were up by 36.8% and totaled 130.

Nonresidential projects likewise grew 18.3% year on year with 3,057 permits accounting for 22.9% of the total.

Nonresidential permits were valued at P17.54 billion, jumping 27.2% from P13.79 billion in April last year.

Approved commercial construction applications made up 70.8% of nonresidential projects, up 17% to 2,165.

Institutional and industrial permits rose 34.9% and 23.4% to 468 and 243, respectively.

Alteration and repair permits amounted to 927, up 16.6% annually and valued at P3.21 billion.

Permits for addition — construction that increases the height or area of an existing building — jumped 31.2% to 584.

Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) had the most approved construction projects, making up 25% of the total with 3,339 permits, followed by Central Luzon (2,076 permits), and Central Visayas (1,558 permits).

Mr. Ricafort expects US and local interest rates to affect construction activities and building permits in the future.

“Going forward, any possible cut in [US] interest rates later in 2024 and in 2025 that could be matched locally, would eventually help spur greater demand for [loans] that could lead to more [construction] activities and the necessary permits,” he said.

The Fed kept its policy rate at 5.25-5.5% on June 12, pushing rate cuts to as far back as December, Reuters reported.

The PSA said that construction statistics are compiled from the copies of original application forms of approved building permits as well as from the demolition and fencing permits collected every month by the agency’s field personnel from the offices of local building officials nationwide.

Source: Business World

Housing crisis — A ticking time bomb

“The toughest disincentive to the homebuilders is the acute scarcity of available real estate for housing."

In the 1800s, when the Philippines had a population of 1.89 million living in traditional “bahay kubo” homes iconic to Philippine culture, housing and shelter shortages were unheard of.

Today with 119.1-million Filipinos, a staggering increase of 6,300 percent, we face a housing crisis with a shortage of 6.5-million homes, projected to rise to 22.0 million by 2040. Behind these numbers lie millions of families enduring substandard living conditions in shelters that can hardly be called home.

Various studies conducted by reputable housing development associations attribute this shortage to rapid population growth, urbanization, a surge in informal settlers, limited availability of land for housing, outdated construction processes, slow permit processes, inadequate financial support to developers, high financial costs, low returns, and a myriad of other unsettling challenges plaguing the housing industry.

The toughest disincentive to the homebuilders is the acute scarcity of available real estate for housing which is a finite supply currently estimated at ₱305 trillion and growing.

The Home Development Mutual Fund, popularly known as Pag-IBIG Fund, was established in 1978 with two mandates: first, to assist in providing affordable decent shelter, and second, to generate savings for its members.

The Fund was given the herculean task of assisting all its members to build a home through socialized housing loans.

Pag-IBIG has performed exceptionally well in reducing the housing backlog since its creation with an impressive record in the past three years of releasing housing loans totaling ₱341 billion to build 297,000 units.

However, the housing gap reported at 6.5-million units as of end 2023 prompted PBBM to order Pag-IBIG to accelerate its program by financing one million houses per year until the end of his term.

But the huge housing backlog even before Pag-IBIG was created and the rapidly expanding population will keep the housing shortage a continuing national concern.

This dire housing situation poses a serious threat to the nation’s security and stability, which can only exacerbate the divide between the underprivileged homeless and the affluent homeowners.

Given this, there is a risk the homeless may turn to ideologies like socialism, viewing Karl Marx’s classless society as more desirable than capitalism.

Neglecting the housing crisis could lead to widespread homelessness, forcing families to live on the streets or in inadequate, overcrowded, and unsafe conditions, accentuating further the social inequality and potentially sparking political disorder and social unrest.

Further, the housing shortage will have broader economic implications, affecting employment, consumer spending, and economic growth.

Some experts in the housing industry propose solutions such as rethinking government’s role in housing finance, delinking housing social assistance from finance markets, and addressing fundamental supply side and urban governance issues.

But with our freewheeling and disharmonious multiparty political system where the economic agenda is subordinate to other less meritorious plans, there is always the bleak prospect the housing crisis will just be overlooked in the halls of power.

Time is of the essence in addressing the housing problem, and while we may not have the luxury of solving it overnight, we need to demonstrate to future generations that beginning today we are earnestly committed to providing decent homes for all of our countrymen.

Source: Daily Tribune