The Bangko Sentral ng Pilipinas’ (BSP) most recent Residential Real Estate Price Index found residential property prices in the Philippines increased to end 2022 and remained noticeably higher than 2021. However, quarterly growth slowed, or in the case of Metro Manila fell, which may be a sign inflation is starting to impact the property market.
Overall, residential property prices in the Philippines rose by 7.4 percent during the fourth quarter of last year when compared to the same period in 2021. That was led by the National Capital Region (NCR) which recorded a 16.1 percent increase in home prices year-on-year.
However, the quarterly numbers were much more modest. Residential property prices in the Philippines were up 2.2 percent between the third and fourth quarters of 2022. And in Metro Manila, they decreased by 2.4 percent. This was a shift from the previous Residential Real Estate Price Index where residential property prices in the NCR surged by 14.6 percent in the third quarter of 2022 when compared to the second quarter.
Perhaps the larger area of concern is the fact that the number of residential real estate loans in the NCR plummeted by 22 percent during the final quarter of 2022. While some of that is due to the normal end-of-the-year slowdown, experts are also watching to see what role inflation had to play in that fall.
The central bank raised interest rates multiple times over the past 12 months in a bid to curb inflation. This move affects mortgages as well since it increases borrowing costs. Should the number of mortgages continue to decline, property prices are likely to decline in some form.
“The aggressive contractionary monetary policy stance by the BSP which is in sync with other central banks, prompted by the rallying prices, may slow down the global recovery, as well as delay the expected real estate market recovery in the short term as local and global locators, assess the elevated uncertainties,” Cushman & Wakefield Philippines opined in a recent report.
Keep Reading: Interest rate hikes may impact the Philippine real estate market
