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Philippines: Rising inflation, rate hikes to temper home sales
MANILA, Philippines — Residential real estate purchases will likely slow down in the coming months as lower and middle-income Filipinos brace for rising inflation and interest rates, Leechiu Property Consultants (LPC) said Wednesday.
In a news briefing, the private real estate brokerage said interest charged on home loans could go up to 10% as the Bangko Sentral ng Pilipinas tightens its monetary policy to fight inflation.
The higher rates could also push up monthly amortization of new homebuyers by as much as 29%, LPC said. This, in turn, could hurt demand for shelters especially among the lower and middle income families, although overseas Filipino workers might pick up the slack as a weak peso boosts their remittances.
“Weakening for the middle and lower segment, which will only be offset by OFWs who might continue buying. The prices by then, two to four years from now, would have increased substantially,” Roy Amado Golez, director for research and consultancy at LPC, said.
“Increasing inflation plus interest rates have a direct impact in the lower segments of the market as it eats up expenses,” Golez added.
Data provided by LPC revealed that there are 467,000 residential condominium units in the local real estate market, wherein 11,400 units of those remain unsold.
Within Metro Manila’s residential spaces, LPC noted that condo take-up rose 54% in the second quarter compared to the preceding three months after developers began offering flexible payment terms to entice the market.
Golez said the high-end residential market will experience “a bit of softening” because of interest rate hikes.
POGO comeback?
Meanwhile, LPC said Philippine Offshore Gaming Operators (POGOs) will likely return in the country if hiring increases and travel restrictions were loosened, something that could boost the country’s property market anew.
LPC said POGOs’ footprint in the local office space market is now starting to recover, although “it’s still too early to tell how this will develop.”
LPC also noted that the incoming Marcos Jr. administration has yet to make a clear stance on Philippine offshore gambling operators, which are populated with Chinese employees that cater to punters from the mainland.
“Hard to tell what the new admin will look at POGOs. I have a feeling that they would see the benefits of having POGOs come back to life,” Phillip Añonuevo, executive director for commercial leasing, said.
“It’s mainly because there will be more trickle-down effect of employees here thru spending and uplifting the economy,” Añonuevo added.
Source: https://www.philstar.com/business/2022/06/29/2191789/rising-inflation-rate-hikes-temper-home-sales