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Economist dismisses fears over real estate bubble 

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An economist has discounted a real estate bubble despite the increase in building permits issuance while the residential real estate price index (RREPI) declined, according to a report by Philippine News Agency.

Citing Philippine Statistics Authority (PSA) data, ING Bank Manila senior economist Nicholas Mapa cited the pick-up in construction activities in the second quarter of 2021 compared to last year.

“This reflects pent up permits as construction activity was finally allowed to resume in some parts and on a staggered and limited basis,” he said in a report Tuesday, noting the impact of the movement restrictions by the government to address the rise of coronavirus disease 2019 (Covid-19) infections since last year.  


The PSA reported Monday the total number of constructions rose by 114.1 percent year-on-year in the second quarter of this year. 

For one, residential-related constructions expanded by 102.8 percent, mostly contributed by those in areas outside the National Capital Region (NCR).

Real estate constructions in the Cavite, Laguna, Batangas, Rizal, and Quezon (Calabarzon) registered the highest number with 9,773 or 25.5 percent of the total for the period. 

Mapa said the rise in residential unit construction in Region 4-A “mirrors the recent developments” noted in the Bangko Sentral ng Pilipinas’ RREPI report. 

Citing the central bank report, he said the RREPI was still in negative “as the overall market was weighed down by the steep drop in condominium prices and prices in NCR in general.”  

Mapa said the same report also shows that housing prices outside NCR and for single-detached units have picked up, which is reflected in the permits data. 

“This trend suggests that the Philippines is also experiencing the global phenomenon of migration from the urban centers to the areas outside the city with Filipinos in search of more space. After being locked down in the city for more than a year, it’s no surprise that there is now a natural and healthy demand for property and homes outside the city,” he said. 

RREPI measures the average change in the prices of various housing unit types based on real estate loans extended by banks. 

It is used to gauge the real estate and credit market conditions in the domestic economy.  

Mapa said the trend of increased residential-related constructions in the provinces is expected to boost developments outside of the national capital "as the Philippines hopes to undergo some form of deurbanization.”

However, despite the rise in building permits issuance, he said “signs of a real estate bubble have yet to manifest in a palpable manner.” 

“BSP’s RREPI remains negative and previously frothy condominium prices appear to have been deflated by the pandemic. Meanwhile, rental inflation has continued to slow and settled at 1.1 percent in August,” he added. 

Based on the first quarter of 2021 RREPI, residential real estate prices of various types of new housing units contracted by 4.2 percent year-on-year, and by 1.6 percent quarter-on-quarter due to lower demand on account of the pandemic.

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