PHILIPPINE DAILY INQUIRER- February 22, 2009

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Housing seen as bright spot for RP

MANILA, Philippines—Unmet demand for housing will reach between 423,000 and 687,00 units this year, ensuring that the real estate sector remains one of the bright spots of the domestic economy amid the worsening global financial crisis, a government official said.

Gonzalo Benjamin A. Bongolan, president of the Home Guaranty Corp., said housing demand in 2009 was estimated at between 643,422 and 913,480 units.

However, supply has rarely exceeded 200,000 units in the past eight years and peaked at 221,000 in 2008.

He said that supply grew 27.6 percent last year from some 173,000 the previous year, which is believed to have been due to the record 7.2-percent growth in the gross domestic product in 2007.

Bongolan said that in the same period, there was a 141-percent increase in the supply for condominiums and 55 percent in low-cost housing units, which he said indicates a growing preference for these packages.

Also, the HGC chief said the default rate of housing loans, or loans used to buy a residential property, settled at 7.62 percent as of 2007 from a 10-year peak of 13.87 percent in 2000.

For loans used to develop a subdivision or condominium, the default rate slid to 13.25 percent from a high of 38.97 percent in 2002.

“We are observing a growing preference for developmental housing loans and continued lending by government agencies and banks,” Bongolan said.

He said the government’s economic stimulus package, especially in infrastructure spending and monetary expansion should benefit the housing and real estate sector.

Still, Bongolan also said the sector was being threatened by the job crisis both here and abroad as well as the projected weakening of the dollar.

These may give rise to defaults on loans due to layoffs and retrenchments and the reduction of housing demand from OFWs.