Philippines home prices decline in 3rd quarter as rates climb

Construction workers labour on scaffolding at an under construction development in Manila, the Philippines. (Bloomberg pic)

MANILA: Philippine home prices declined in the third quarter from the prior three months, reversing a short-lived rebound as interest rates increased.

Housing values fell 0.6% quarter-on-quarter, according to Bangko Sentral ng Pilipinas. Prices rose 0.8% gain in the second quarter following a 0.9% decline in the first three months of the year.

The central bank raised rates as inflation accelerated to defend the peso, which was the worst performer among Asia’s most actively-traded currencies in the first half after the Indian rupee. In the past six months, the peso emerged as the region’s top performer. The benchmark interest rate was pushed 175 basis points higher since May before taking a pause this month.

The price declines were more profound outside the capital area. Housing values slid 1.3% in the provinces, compared with a 0.2% drop in the greater Manila area, the central bank said, citing data based on housing loans granted by banks.

On a year-on-year basis, third-quarter home prices climbed 4.4%, slowing from a 4.8% increase in the previous three months, the central bank said.

Seven in 10 residential real estate loans were for the acquisition of new homes, of which more than half were condominium units. Metro Manila accounted for 57.4% of mortgages granted by banks in the third quarter.

Separately, the central bank said outstanding loans granted by foreign currency deposit units of banks stood at US$16.1 billion at the end of September, up US$419 million from end-June’s US$15.7 billion and US$1.1 billion higher than a year ago as disbursements exceeded principal repayments. The maturity mix of the loans remained biased toward medium- to long-term debt, payable over more than a year, accounting for about 77% of the total.