Housing prices drop for first time since 2021

Residential property price growth contracted for the first time in three years in the third quarter, the Bangko Sentral ng Pilipinas (BSP) reported late last Friday.

The Residential Real Estate Price Index fell by 2.3 percent for the three-month period, reversing from the 2.7-percent and 12.9-percent expansions, respectively, seen in the second quarter and a year earlier.

Quarter on quarter, housing prices were down 1.6 percent after growing by 1.8 percent in April to June.

Duplex housing units saw prices plunge by 48.1 percent, in particular, while condominium units also fell by 9.4 percent, outpacing the 2.9-percent and 0.7-percent upticks for single-detached/attached and townhouses, respectively.

Compared to the second quarter, only single-detached/attached houses registered higher prices ( 2.6 percent) while other housing types fell: duplex housing units (46.6 percent), townhouses (5.3 percent) and condominium units (5.3 percent).

By area, residential property prices fell by 14.6 percent in the National Capital Region (NCR) following declines for duplex housing units (-37.6 percent), single-detached/attached houses (-22.9 percent) and condominium units (-14.3 percent), which offset an increase in townhouse prices (13.9 percent).

Prices outside the NCR rose 3.0 percent, driven by increases in single-detached/attached houses (6.7 percent) and condominium units (3.6 percent) that outweighed declines in duplex housing units (-51.5 percent) and townhouse prices (-2.3 percent).

Compared to the previous quarter, housing prices fell by 3.7 percent and 1.0 percent, respectively, in the NCR and elsewhere.

Meanwhile, residential real estate loans (RRELs) for new housing plunged by 15.7 percent from a year earlier. Broken down, the drop was a larger 20.3 percent in the NCR and hit 13.0 percent outside the metropolis.

The double-digit contractions, the BSP said, were "significant, yet not as severe as the decline in housing loan availment observed during the pandemic, which began in Q2 2020."

"This is also consistent with the outcome of the Q3 2024 Consumer Expectations Survey (CES), which showed consumers' more pessimistic view on buying a house and lot during the period," it added.

Quarter-on-quarter, housing loans increased by 3.1 percent nationwide. Loans in the NCR rose by 15.8 percent, offsetting a 2.4 percent drop in the rest of the country.

The BSP said that this matched its Senior Bank Loan Officers' Survey that found higher demand for housing loans.

The average appraised value of new housing units, meanwhile, was P86,417 per square meter in the third quarter, down 6.2 percent from last year but up 3.2 percent from the previous quarter.

In the NCR, the average value dropped 13.7 percent year on year and 3.6 percent quarter on quarter to P135,076 per sqm. Outside the metropolis, this rose 10.1 percent on an annual basis and 3.5 percent quarter on quarter to P60,804.

Source: Business World

Inflation quickens to 2.5% in November

The country’s inflation rate continued its acceleration streak for the second straight month in November due to faster rise in food and transportation costs during the period, the Philippine Statistics Authority (PSA) reported.

At a press conference, National Statistician and PSA chief Undersecretary Claire Dennis Mapa said inflation —which measures the rate of increase in the prices of goods and services— quickened further to 2.5% last month.

This was faster than the 2.3% inflation print recorded in October.

Last month’s rate also fell within the Bangko Sentral ng Pilipinas’ (BSP) forecast range of 2.2% to 3%, citing increased prices of vegetables, fish, and meat due to unfavorable weather conditions, higher electricity rates and petroleum prices, and the depreciation of the peso as the primary sources of upward price pressures this month.

November’s inflation rate brought the year-to-date average inflation rate to stand at 3.2%, which is within the government’s ceiling of 2% to 4% for the entire 2024.

Food prices

The BSP, in a statement, said that the inflation rate seen in November is consistent with its assessment that inflation will continue to trend closer to the low end of the target range in the near term, reflecting easing supply pressures for key food items, particularly rice.

“Ang pangunahing dahilan ng mas mataas na antas ng inflation nitong Nobyembre 2024 kesa noong Oktubre 2024 ay ang mas mabilis na pagtaas ng presyo ng Food and Non-alcoholic Beverages sa antas na 3.4% [mula 2.9%],” Mapa said.

(The main contributor to the faster inflation rate in November 2024 versus October 2024 was the faster increase in the prices of Food and Non-alcoholic Beverages with a rate of 3.4%.)

The PSA chief added that the Food and Non-Alcoholic Beverages index accounted for 65.9% of the overall inflation rate last month.

In particular, the index of vegetables saw an increase to 5.9% from a decline of 9.2% in October “dahil nga sa mga sunod-sunod na bagyo (due to the series of consecutive storms).”

Likewise, inflation for fish and other seafood rose to 0.4% from a negative rate or decrease of 0.4% month-on-month.

Meat inflation also saw a slight increment of 3.9% during the month from 3.6% in October.

Food inflation, which tracks the price movements of food items in a "basket" commonly purchased by households, also rose to 3.5% from 3% month-on-month.

“Despite the strong typhoons our country faced in recent months, consumer prices have remained relatively stable. This demonstrates the resilience of our economy and the effectiveness of our policies,” National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said in a statement.

Balisacan, nonetheless, noted that the government is closely monitoring prices of commodities, especially food, in the wake of successive typhoons in October and November.

Also contributing to the November inflation uptrend was Transport index with a slower decrease of 1.2% from -2.1% in the prior month, accounting for 28.4% of the overall print, amid the slower decrease in the prices of gasoline and diesel which posted inflation prints of -8% (from -11.1) and -9.4% (from -18.5%), respectively.

Inflation felt by the bottom 30% income households in the country veered away from the national trend as it slowed down to 2.9% from 3.4% month-on-month.

Mapa said this was primarily due to a decline in food inflation for the income class at 3.4% from 3.9% with the rice index easing down to a rate of 5.4% from 10.2% in October.

Full-year projection

During its December 2 meeting, the Development Budget Coordination Committee (DBCC) projected that full-year 2024 inflation would average between 3.1% to 3.3%, lower than last year’s average inflation rate of 6%.

The DBCC also maintained its inflation target of 2% to 4% from 2025 to 2028.

“We are committed to maintaining price stability by ensuring inflation remains low and manageable. This will be supported by prudent monetary policies and strategic trade measures in the near term, as well as improved access to quality job opportunities and productivity-enhancing reforms in the medium term,” said Balisacan.

The NEDA chief added that the government remains optimistic that the December inflation figures will sustain the trend of price stability and that inflation will remain within the government’s target range.

“Through the timely and strategic use of our various policy levers, a whole-of-government and whole-of-society approach is vital to sustain our momentum in effectively managing inflation. Achieving this objective will be key to making economic growth more inclusive and accelerating our poverty reduction efforts,” Balisacan said.

Source: GMA

Domestic food price inflation remains high

According to the World Bank, domestic food price inflation remains high in many low- and middle-income countries.

Inflation higher than five percent is experienced in 70 percent of low-income countries (6.2 percentage points lower), 47.8 percent of lower-middle-income countries (three percentage points lower), 36 percent of upper-middle-income countries (two percentage points lower) and 9.1 percent of high-income countries (0.2 percentage points higher).

In real terms, food price inflation exceeded overall inflation in 59.8 percent of the 164 countries where data are available.

Since the World Bank’s last update on Oct. 18, the agricultural and cereal price indices rose by one and two percent, respectively; the export price index remained unchanged. Maize prices increased by seven percent, while wheat and rice prices fell by five percent, respectively.

On a year-on-year basis, maize prices are nine percent lower and rice prices are eight percent lower, while wheat prices are one percent higher. Compared to January 2020, maize prices are nine percent higher, wheat prices are three percent lower, and rice prices are 29 percent higher.

The November 2024 Agricultural Market Information System (AMIS) Market Monitor highlighted various price fluctuations and policy changes in global agriculture in October. Wheat prices reached multi-month highs, largely because of weather-related planting delays in the northern hemisphere, but later eased as conditions improved.

Maize prices also increased slightly, even with swift harvest progress in the United States, whereas rice and soybean prices fell. In policy moves, India removed the minimum export price for non-basmati white rice, and Bangladesh and Turkey relaxed import restrictions on maize, rice, and vegetable oils.

In the most recent Commodity Markets Outlook, the World Bank projects a four percent decline in the agriculture commodity prices index in 2025 before stabilizing in 2026, after a two percent increase this year.

The report also summarizes concerns about food insecurity and notes that the world remains far from achieving the goal of zero hunger by 2030. Conflict, extreme weather and economic shocks are the major drivers of food insecurity. It is projected that food prices will decrease by four percent in 2025 before stabilizing in 2026.

The latest Hunger Hotspots Report by the Food and Agriculture Organization (FAO) of the United Nations and the World Food Program (WFP) warns of worsening acute food insecurity in 16 hunger hotspots (covering 22 countries and territories) that will require urgent action between now and May 2025. Conflict, climate and the economy are the primary drivers of food insecurity. Conflict continues to be the primary driver of hunger in 15 hotspots.

The Philippines, thankfully, is not yet among the countries suffering from acute food insecurity.

Specifically for Asia, the World Bank reports that East Asia and the Pacific remain highly vulnerable to the impacts of climate change, with extreme weather events becoming more frequent and severe.

Weather forecasters predict that La Niña conditions will prevail from October onwards, contributing to a chance of above-normal rainfall in several countries, including the Lao People’s Democratic Republic (PDR), the Philippines, Thailand and Vietnam.

Last month, Tropical Storm Trami or Typhoon Kristine hit several provinces on Luzon Island in the Philippines, resulting in widespread flooding and landslides, leaving at least 126 dead and missing. Many areas remain isolated, with people in need of rescue.

The cost of damage to the agricultural sector in the Philippines from Typhoon Kristine was estimated at P3.11 billion, with 74,554 farmers affected across 11 regions.

Damaged farmlands covered 72,329 hectares, with a production loss of 160,107 metric tons. The rice sector was the hardest hit, with losses of 152,440 metric tons and a value of P2.87 billion. High-value crops suffered P121.08 million in damage. Damage to agricultural infrastructure, including irrigation facilities and other farm structures, totaled P67.66 million.

The Department of Agriculture, however, reported that at least 60 to 70 percent of farmers in the affected areas had already harvested their palay (unhusked rice) before Kristine made landfall. However, the DA also predicted that palay production would likely drop by 3.24 percent this year due to the continued onslaught of tropical cyclones.

Following Russia’s invasion of Ukraine, trade-related policies imposed by countries have surged.

The global food crisis has been partially worsened by the growing number of food and fertilizer trade restrictions put in place by countries aiming to increase domestic supply and reduce prices. As of now, 17 countries have implemented 22 food export bans, and eight countries have implemented 12 export-limiting measures.

The World Bank’s food and nutrition security portfolio now spans 90 countries. It includes both short-term interventions such as expanding social protection and longer-term resilience initiatives such as boosting productivity and climate-smart agriculture. The Bank’s intervention is expected to benefit 296 million people.

In May 2022, the World Bank Group and the G7 Presidency co-convened the Global Alliance for Food Security, which aims to catalyze an immediate and concerted response to the unfolding global hunger crisis. The Alliance has developed the publicly accessible Global Food and Nutrition Security Dashboard, which provides timely information for global and local decision-makers to help improve coordination of the policy and financial response to the food crisis.

Last year, the heads of the FAO, IMF, World Bank Group, WFP and WTO released a third joint statement calling for preventive action against a worsening food and nutrition security crisis, with further urgent actions required to (i) rescue hunger hotspots, (ii) facilitate trade, improve the functioning of markets, and enhance the role of the private sector, and (iii) reform and repurpose harmful subsidies with careful targeting and efficiency.

They appealed for countries to balance short-term urgent interventions with longer-term resilience efforts as they respond to the crisis.

Source: Business World